(IPE) Viewpoint: And if we trusted the market to improve ESG information?

In this column published on January 20, 2023 on IPE, Noël Amenc, Associate Professor of Finance at EDHEC and Affiliate Member at EDHEC-Risk Climate Impact Institute, stresses out : "[...] The European legislator should draw all the necessary conclusions from this conflict of interest and from the limitations of the proposed pro-data regulations, which all suffer from one common defect, namely the lack of transparency on the methods and the construction of many indicators whose usage they require or encourage and, de facto, the lack of guarantee on their quality and integrity. In effect, many of the indicators used in the Sustainable Finance Disclosure Regulation (SFDR) and Benchmark Regulation (BMR), which covers index sustainability disclosures and minimum standards for construction of the regulatory sanctioned climate transition and Paris-Aligned Benchmarks (PAB), rely on modelling that, due to their private nature, are not included in contradictory public debate. Subject to confidentiality clauses, only clients have access to details on the data that allows the scores and indicators used in reporting and portfolio construction to be calculated. What trust would one put in financial information that is solely reserved for investors and not published, that no independent analyst could challenge, given that the regulator would have no way of guaranteeing its veracity either?".

• To read this article in full : follow this link
• To know more about Professor Amenc : click here
• To discover the EDHEC-Risk Climate Impact Institute : follow this link