Bridging the gap in sustainable finance cannot be done solely by the public sector.  The private sector must be engaged to undertake initiatives that work towards objectives set forth by governments.  However, without reporting systems or databases in place, impact measurement becomes a challenge, especially for early adapters.  As such, principle 6 proposed in the fifth edition of ESCAP’s  Financing for Development Series, “Sustainable Finance: Bridging the gap in Asia and the Pacific”,  recommends  undertaking of investment in much-needed sectoral and project-based financial data. 

Mind the (data) gap 

While many governments and regulators in the region have developed databases, the need for further action on climate-related data continues to be pressing. Gaps in climate-related data encompass several dimensions, including availability, reliability and comparability. Such gaps prevent efficient pricing of climate-related risks, proper risk management, and the scaling up of private finance.

Expanding access to reliable, standardized data is critical to making informed investment decisions and driving sustainable financial flows. It streamlines investments, assists benchmarking, strengthens credibility and ensures higher replicability of beneficial projects and initiatives. Enhanced investor confidence can in turn lead to increased capital flow into businesses that are proactively engaged in sustainable practices. 

Furthermore, making such data available and comprehensible to the public has additional benefits. Consumers are able to make informed choices and compare company performance.  Retail and institutional investors are, more than ever, able to hold the private sector accountable to its commitments and plans.  Data alone, however, is not enough—strong regulatory frameworks are needed to ensure that reporting is consistent, comparable, and widely adopted across the private sector. 

The role of regulatory support in market development 

Regulations play a pivotal role in enhancing the effectiveness of data platforms by setting high standards for climate-related financial disclosures. These regulatory frameworks compel the private sector to adopt standardized reporting on climate-related risks, ensuring that data across different organizations are consistent and comparable. This uniformity is essential for investors as it enables accurate assessments and comparisons of companies' environmental performance and risks. As such, regulatory support complements efforts to strengthen current data platforms, by driving corporate accountability and ensuring strategic alignment with global sustainability targets.

Spotlight on Data-Driven Initiatives: Transition Pathway Initiative Centre

An example of data for investors can be seen in the tools developed by the Transition Pathway Initiative Centre (TPI Centre). The TPI Centre is an independent research centre tracking and evaluating the progress made by corporates, banks and sovereigns in their transition towards a low-carbon economy. Emphasising transparency, comparability, and accessibility, TPI assessments aim to ensure the data are comparable, understandable, and easily accessible to stakeholders. This approach is rooted in its design core principles:

1. The assessments are designed to be user-friendly, simplifying the process for investors to evaluate transition risks and opportunities within their portfolios.
2. TPI's methodologies are aligned with other significant climate-related initiatives, such as the Task Force on Climate-related Financial Disclosures (TCFD), ensuring consistency and relevancy in reporting standards.
3. All data and methodologies are open source, fostering an environment of transparency and enabling public scrutiny.
4. The integrity of TPI's assessments is backed by rigorous, peer-reviewed methodologies, lending a high-level of credibility and reliability to the data provided.

These principles have garnered substantial support from the global investment community, with over 150 investors—representing more than US$ 80 trillion in assets under management—pledging their backing. 

The TPI Centre’s research helps ensure that companies' and investors' actions are interlocked in the mutual aim of mitigating climate change and achieving the targets set by the Paris Agreement. The Centre achieves this by:

1. assessing how corporates in high-emitting sectors translate climate commitments into concrete action, with a focus on capital expenditure, robustness of emissions reduction targets, and integration of climate considerations into corporate strategy.
2. evaluating companies’ climate governance and management practices. 
3. determining companies’ emissions pathway alignment with the goals of the Paris Agreement. 

Together, these assessments enable investors to identify companies with credible transition strategies.

In addition to monitoring private sector performance, the Centre also monitors the progress made by countries in managing the low-carbon transition and the impacts of climate change. Through the Assessing Sovereigns Climate Opportunities and Risks (ASCOR) framework, the Centre assesses countries’ emissions pathways, climate policies and climate finance. This information is useful for sovereign bondholders, who fund governments’ deficits, as well as corporate investors as they provide insights in the jurisdictions in which companies operate.

As platforms like the TPI Centre continue to shape the landscape of sustainable finance, they also promote a deeper understanding of climate-related risks and opportunities worldwide, thus driving more informed, impactful climate action across various sectors.

Closing thoughts: building a more conducive sustainable finance ecosystem

Investing time and resources in global accessibility to sustainable finance data is a critical step in ensuring that all stakeholders, from investors to policymakers, have the necessary information to make decisions that drive sustainable development and the global low-carbon transition. The TPI’s experience shows that investment in sectoral and project-based financial data platforms, skilled personnel, and supportive regulatory frameworks is essential to advancing global sustainability goals. 

Stakeholders, including governments, companies, and investors, all play a critical role in this ecosystem, driving the demand for and utilization of comprehensive and reliable climate data. By making sustainable finance data more universally accessible and understandable, organizations such as ESCAP and TPI Centre support a more inclusive approach to sustainable development and climate action at the national, regional, and global levels. This accessibility ensures that particularly smaller markets and developing economies have the same data-driven opportunities for climate action as more developed economies.