ESG data has moved from a reporting requirement to a decision-making tool in the financial sector. But how reliable is the data - and what does it take to make it reliable in practice?
ESG data is playing an increasingly central role in financial decisions - from investments to credit ratings and risk analysis. At the same time, the demands for quality, transparency and traceability are increasing in line with new regulations and market expectations.
It is against this background that Finansinspektionen has initiated a guidance project within the Innovation Compass focusing on the reliability of automated and AI-based methods for ESG data. Metria is one of the selected actors contributing with expertise in the project's reference group.
From reporting to decision support
Historically, ESG data has mainly been used for reporting. Today, the situation is different. Data is increasingly used operationally - to price risk, manage capital and make strategic decisions.
This places entirely new demands:
The geographical dimension
A key challenge is the geographical nature of many sustainability risks.
Climate risks, biodiversity and environmental impacts vary greatly depending on location. Yet these factors are often treated as generic indicators.
To inform relevant decisions, ESG data needs to be analyzed in a geographical context.
AI and geodata - a necessary combination
The trend is now towards using AI to combine and analyze a wide variety of geographic data, including satellite data.
Metria's research and development project on biodiversity risks is doing just that. The project, which is co-financed by the Swedish National Space Board, aims to develop methods for creating standardized and comparable landscape information for the financial sector.
The aim is to make it possible to:
From data to reliable decisions
The key issue going forward is not the availability of data - but the quality and reliability of the methods used to produce and use it.
Reliable methods for ESG data require
It is at the intersection of these areas that the next steps in sustainable finance are being developed.
Through participation in the FSA's guidance projects and its own research initiatives, Metria is contributing to the development of this type of decision support.
About Metria:
Metria are experts in real estate information and geographic data. We offer digital solutions and services in GIS, remote sensing, geodata, real estate information.