It’s time to set a global ESG standard for investors
Oliver Bäte, CEO of Allianz, and Hiro Mizuno, UN Special Envoy on Innovative Finance and Sustainable Investments
October 6, 2021
The ISSB could be a game changer for sustainable investment, providing capital markets with reliable and consistent ESG data to enable cross-company comparisons.
—Oliver Bäte and Hiro Mizuno
“There are no jobs on a dead planet,” our B Team colleague and vice-chair Sharan Burrow often says.
Alarm bells are ringing in the wake of the Intergovernmental Panel on Climate Change’s recent report, which sounded a “code red for humanity.” Scientists’ predictions for climate impact on our global ecosystems and livelihoods are startling. Natural catastrophes, extreme weather, and sea level rise will continue, even if the global economy decarbonizes quicker than projected today.
That is why investors, customers and regulators expect companies to deliver on the 1.5-degrees-centigrade target stipulated in the Paris Climate Agreement, and to report on their progress. Those who are adapting well will be rewarded by the financial markets: Integrated business models have boosted companies’ performance even when times get tough, like during the COVID-19 pandemic.
As current and former executives of the world’s largest insurer and the world’s largest asset owner, respectively, we have grappled with the challenges of integrating environmental, social and governance (ESG) measures into portfolios. For investors to get behind businesses that are serious about reducing their carbon footprint, slowing biodiversity loss and advancing a regenerative economy, they need reliable data and tools to differentiate between virtue signaling and real impact. A key obstacle facing these investors is the lack of meaningful and comparable data, based on a global standard for corporate ESG reporting.
An opportunity to reset our course has now presented itself. COP26, the United Nations climate conference taking place in Glasgow this November, will not only address the national emission reduction targets of governments, but also pave the way to making sustainable business activities more identifiable to investors.