Green Investors Need Better Data and Reporting

    Stockholm (NordSIP) – On November 26, Norges Bank Investment Management (NBIM) highlighted the need for better climate data and more consistent climate reporting from companies in a letter to the Norwegian Ministry of Finance about its work on climate risk in the Government Pension Fund Global (GPFG).

    Better Data

    “One general challenge facing analyses of climate risk is the limited availability of high-quality and relevant data,” the bank complained in a letter signed by Øystein Olsen, governor of Norges Bank, and Trond Grande, NBIM’s Deputy CEO.

    “Information on companies’ carbon emissions and how their operations might be affected by climate risk (both physical and transition risks) is critical for our analysis of climate risk in the portfolio. Access to relevant, high-quality data is crucial for this work,” the NBIM executives added. “As an investor in more than 9,000 companies in more than 70 countries, we need to be able to quantify and analyse the risks facing the fund.”

    However, the letter also noted that efforts had been undertaken to overcome these issues. “Numerous initiatives are under way to increase corporate disclosure and investor access to data,” Olsen and Grande explain. Examples include the EU’s Non-Financial Reporting Directive, the TCFD’s recommendations, and initiatives for reporting on environmental, social and governance issues such as the Global Reporting Initiative (GRI), the Sustainability Accounting Standards Board (SASB) and CDP (formerly the Carbon Disclosure Project).”

    Reporting Needs

    Improved data quality should walk hand in hand with other issues facing investors looking to enhance their climate credentials, according to the letter’s authors. “We encourage companies to move from words to numbers so that we can better evaluate their operations and the financial risks and opportunities associated with their environmental and social conduct.”

    The problem with reporting is not just the lack of data, but also how much its quality varies across companies. “Our general observation is that there is considerable variation in levels of climate disclosure between both companies and sectors. We have seen some improvement in companies’ reporting on climate change in recent years.”

    “In addition, we call for reporting on physical risks and express an expectation that companies disclose information on assets and facilities, including location and technical data,” the letter concludes.

    Image by Free-Photos from Pixabay


    Filipe Albuquerque
    Filipe Albuquerque
    Filipe is an economist with 8 years of experience in macroeconomic and financial analysis for the Economist Intelligence Unit, the UN World Institute for Development Economic Research, the Stockholm School of Economics and the School of Oriental and African Studies. Filipe holds a MSc in European Political Economy from the LSE and a MSc in Economics from the University of London, where he currently is a PhD candidate.

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