Views from the Oxford Sustainable Finance Summit: Data, accountability and policy need to work in tandem to deliver transformation

On behalf of the All-Party Parliamentary Group on Sustainable Finance, Seahorse team members Will Parsons and Charles Long attended the Oxford Sustainable Finance Summit in July and report back here:

Last month, as the UK sweltered under a record-breaking heatwave and much of Europe blistered with wildfires, several hundred sustainable finance experts and stakeholders gathered for the inaugural Oxford Sustainable Finance Summit.

A hesitant sense of progress ran through the summit, with panellists noting that there has been a gear shift for sustainable finance to ‘go mainstream’. This has matched our experience at Seahorse, from growing interest in the APPG on Sustainable Finance, to our work supporting E3G who campaigned to secure mandatory transition plans in the UK, and supporting new investors like Renewable Power Capital.

However, there were also warnings: in particular, recent challenges to proposed climate disclosure rules in the US and the energy crisis pose significant headwinds. As Deutsche Bundesbank’s Henner Asche remarked, “years of underinvestment in renewables has plunged Europe into an energy nightmare." Now $5.7tn of sustainable investment is needed worldwide every year until 2030 to stay within 1.5°C of warming.

Three major recurring themes for driving sustainable finance emerged throughout the summit: better and more consistent reporting, frameworks and regulation to hold key players to account, and government policy to promote sustainable investment.

The availability of good quality data was seen as crucial for driving the volume of sustainable investment required. With good data in hand, investors can make better decisions about where to put their money and avoid financing unsustainable, risky activities – or so the argument goes.

Increasing requirements for climate-related disclosures and net zero transition plans were hoped to deliver this much-needed information, while also clarifying the concrete actions and near-term goals that will guide corporate action. However, questions remained on what good practice will look like.

Nature-based reporting emerged as a key next frontier following climate data, primarily through the Taskforce on Nature-Related Financial Disclosures. Technical innovations were also seen as crucial for developing and analysing this information, for example through increasing satellite imagery and “spatial analysis” to monitor deforestation.

But there was also a sense that efforts to gather and disclose this data can only go so far. Many felt that without strong mechanisms of accountability across the key players in sustainable finance, this growing flood of data would have limited effect in bringing about transformational change.

In the first instance, it was hoped that this pressure would come directly from investors, including through longer-term strategies of stewardship to shift companies’ behaviour. Norges Bank, BlackRock, and Franklin Templeton made this case, but in a note of caution Smith School Professor of Finance Robert Bauer noted that his studies of engagement had so far shown only a 20% success rate.

Climate litigation, too, was highlighted as a growing field for accountability when softer measures failed, both for direct compensation for the effects of climate change and against failure to adapt physical assets to climate risk. Panellists here argued that duties of care and human rights legislation could quickly catch up with irresponsible investors.

Ultimately, however, it falls on governments to make sure private actors are playing ball and their sustainability claims are stacking up. Desiree Fixler, the whistle-blower who shone a light on alleged greenwashing by asset management giant DWS, said the last year had been a “wake-up call” and a “much needed reality check” for ESG. Many companies’ sustainability claims lack substance and “nothing cleanses the market better than strong enforcement mechanisms.”

These sentiments were echoed by numerous speakers. Former Canadian Environment Minister Catherine McKenna spoke of the “alphabet soup” of disclosure initiatives and ESG reporting. Governments and regulators were called on to discourage investment in risky activities and work across borders to harmonise their efforts, such as in green taxonomies. In addition, the summit showed an increased awareness among central banks of their duty to promote the inclusion of climate-related risks and impacts in financial decision-making, a cause in which Seahorse is currently supporting WWF International.

The UK’s Green Finance Strategy is due later this year and provides one of many opportunities to deliver on these opportunities. Seahorse will be working with the APPG on Sustainable Finance to raise ambition in Parliament, and are looking to expand our work across public affairs and public relations with sustainable finance leaders and campaigns. To find out more about our work and the support we can offer, please contact wparsons@seahorseenvironmental.co.uk and clong@seahorseenvironmental.co.uk.