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FoSDA: Future of Sustainable Data Alliance
FoSDA has stepped up as a thought leader in discussing the data and technology that is needed to address and overcome global ESG challenges. As an overarching goal, it aims to answer the question “What data do investors and governments need to deploy capital sustainably and in line with the requirements of regulators, citizens, and the market now and in the future?”.
Financial markets play a key role in instigating change and driving funds towards sustainable developments and transitions. However, the capital market remains slow to consider and integrate sustainable information into investment decision-making processes. At best, this results in inefficient allocation of funds, frustrating substantial progress. At worse, it leads to investments in undertakings that are environmentally or socially harmful. FoSDA recognizes this and the fact that robust data systems are needed to support the active integration of sustainable information into investment decisions. It contributes to filling this gap by taking on the issue from a data and technology perspective.
FoSDA was launched in January 2020 in Davos by Refinitiv and the World Economic Forum with a group of founding partners: IIF, ASIFMA, Tsinghua University, OMFIF, GFMA, Climate Bonds Initiative, FinTech4good, Everledger, Oxford University, the Spatial Finance Initiative, Catapult, Finance for Biodiversity, and GoImpact. The alliance has a defined initiative, FoSDA outlines three main objectives for itself:
- ESG Data Requirements - To articulate the future data requirements investors and governments need to accurately integrate ESG data into the decision-making process.
- Technology and Alternative Data - To highlight new technology and data sets that can support a just transition to sustainable development.
- UN SDG Impact Data - To determine data needs and how to satisfy them for investors wanting to take greater account of SDG-related risks and impacts.
In addition, FoSDA states the following three-pillared approach to guide its efforts in attaining these objectives:
- Serving as a forum to harmonize and promote common standards and best practices
- Facilitating the exchange of experience and insights on relevant data
- Working with partners and supporters to produce a recommendation on the future of sustainable data. They aim to foster an evolving mindset; co-operate with regulators and the industry, and work to empower all organizations to meet their shared goals of economic stability and inclusive growth
Each year, FoSDA defines and focuses on a set of high-priority workstreams. The rest of this article will discuss the key takeaways and outputs of the 2021 workstreams, the work being done for 2022, and Greenomy’s role as a FoSDA member.
Mapping Taxonomies to Data
The key output of the 2021 workstream on mapping taxonomies to data was an infographic and analysis that detailed the status of taxonomy development and roll-out worldwide. The analysis provides an overview of the taxonomy status of each country discussing, drafting, developing, or implementing a taxonomy guide or regulation.
Greenomy is a working member of the 2022 mapping taxonomies to data workstream. This year, the workstream aims to build on its initial analysis and create a fully-fledged and open-source Taxonomy Repository to keep track of critical elements in taxonomies as they are individually planned and rolled out around the world. This will be an incredibly valuable source of data for comparing similarities and unique features that arise across local and international taxonomies. Knowledge sharing is ingrained in Greenomy’s values, and within an alliance, it is a key driver of mutual growth and progress. Our Regulatory Watch keeps track of emerging taxonomies and legislative trends around the world, information that can flow directly into this workstream and which can in turn benefit from the repository that will be produced from collective FoSDA knowledge.
ESG Data Gaps & Holes
In 2021, FoSDA produced an ESG data gaps and holes report containing critical information and policy recommendations for the global ESG data space, ahead of COP26. The objectives of the report were to map the data gaps and holes, identify why these exist, and put forth best practices and proposed approaches to fill the gaps and holes. FoSDA’s summary of the report’s key findings is listed in the image below.
This workstream continues in 2022 with the intention of digging deeper into datasets for specific use cases and financial market segments. The goals of this year’s workstream include formulating recommendations for critical datasets and a review of where data creation and accessibility is strong, as well as where more transparency and work is needed.
Greenomy is a working member of the 2022 ESG data gaps and holes workstreams. This workstream is particularly relevant to our product and mission, as a core element of Greenomy’s platform is to contribute to closing data gaps and holes. Our platform facilitates ESG data creation, collection, distribution, and exchange via our reporting tool and data network. Greenomy’s portals and services form a market infrastructure built to support data dissemination, exchange, and transparency. As such, we are in a unique position to contribute to knowledge creation on this front. Equally as important, we are in a unique position to take action on the insights that we generate together in FoSDA on this workstream.
Also ahead of COP26 in 2021, FoSDA published a report in collaboration with the Official Monetary and Financial Institutions Forum (OMFIF) on where focus is needed to improve access to forward-looking data. Forward-looking data refers to definitions and strategies for future data creation and collection given that climate change analyses must take in the long-term and uncertain characteristics of the issue. An overview of their findings is summarized in the graphic below.
The forward-looking data workstream was a 2021 workstream that culminated in this report. It is not included in the 2022 workstreams.
Talent Development & Capacity Building
The 2021 talent development and capacity building workstream addresses a need for new workforce skill sets in light of urgent and changing conditions caused by the climate crisis. This workstream focused on researching what skillsets are needed to support ESG data analysis for sustainable finance, and how these skillsets are currently being developed. Core progress is being made on this in the form of the World Economic Forum’s Sustainable Finance Data Skills and Capacity Building Directory, which overviews some of these ESG data skills that are needed, and lists capacity-building providers worldwide.
The talent development and capacity building workstream was a 2021 workstream and is not included in the 2022 workstreams.
Biodiversity and Nature-Based Finance
Biodiversity and nature-based finance is a new workstream in 2022. It emerges from FoSDA’s 2021 finding that biodiversity data was in fact a data “hole”. It has become clear that definitions of data in the biodiversity space are urgently needed and focus on this area has gained traction. FoSDA has partnered with the Taskforce for Nature-Based Financial Disclosures (TNFD) for this workstream and will research global policy and disclosure initiatives with the objective of forming recommendations in this space.
Greenomy advocates with international thought leaders and standard setters to keep track of critical developments in global sustainable finance and to contribute our expertise towards ‘greening up’ the economy on a global scale. For more information on the international working groups that we advocate with, check out our vision.