A conference with a motherlode of thoughts, ideas, opinions and inspiration on green finance
Attending my first in-person business conference since 2019 was a jolt to my social nervous system after months of solitary work, in-home-office virtual events, webinars, Zoom calls and podcasts. What a relief! Those cyber communications were better than the alternative – silence. But humans are social creatures, and we occasionally need to herd together in real life to feel the full force of the green finance movement.
At the GreenFin 22 conference (June 28 – 29), I joined over 600 financial professionals at Chelsea Piers 60 in New York City for an intensive two days of speeches, panel discussions and networking. Expertly curated and programmed by Grant Harrison, director and senior analyst of sustainable finance and ESG for The GreenBiz Group, GreenFin 22 served up a motherlode of thoughts, ideas, opinions and inspiration. Here are my three key takeaways:
1) Reporting standards and regulations — especially the proposed U.S. SEC rule on climate risk disclosure — are top of mind and surfaced in many sessions. In one example among several, Tim Mohin, currently EVP and CSO of Persefoni, a carbon measurement startup, moderated a panel billed as “A Discussion With the Experts: TCFD, SEC and GFANZ,” — no small topic to cover in 25 minutes. Mohin is one of the best-versed professionals in the field of sustainability. With a background in public policy (the U.S. EPA and the Senate), software (Intel, Apple and AMD) and sustainability reporting and business strategy (a stint as chief executive of the Global Reporting Initiative), his expertise bodes well for making real progress in the financial sector. His approach at Persefoni is to provide carbon management along the lines of financial reporting. “We need to manage carbon with the same capabilities and confidence used to manage corporate financial transactions,” Mohin said.
The proposed SEC rule mandating disclosure of climate risks by businesses is a game-changer and investors are demanding such information.
The panel’s conversation between a former SEC ESG advisor (Satyam Khanna), a senior advisor and vice-chair for GFANZ and a founder of TCFD (Curtis Ravenel) and a specialist in global regulatory climate disclosure (Kristina Wyatt) outlined the progress toward setting common standards for sustainable and ESG investing. All asserted that the proposed SEC rule mandating disclosure of climate risks by businesses was a game-changer and that investors are demanding such information. Even if some areas of business are pushing back against its mandate, there’s no turning back on this trend. Pressure from investors for more disclosure and more transparency in reporting on climate issues material to the bottom line will only continue to grow — that was a consensus opinion — and companies will just have to meet those demands.
Mohin also outlined a nuanced defense of GFANZ — led by Mark Carney, head of impact investing at Brookfield Asset Management and former governor of the Bank of England — to accelerate the transition to a net-zero global economy by uniting financial sector-specific alliances across the globe. GFANZ has been lauded for its ambitious scale (more than 450 members firms representing more than $130 trillion in assets under management) and chided for its lack of actionable follow-up to its initial pledges. Carney acknowledged that, going forward, the value of such an initiative, with both its enormous potential to turn the global economy toward the Paris climate goals and its equally large chance of becoming little more than PR, will be determined by how it can turn concept into reality. Carney said in a video address that the key to achieving net zero will be “judgment based on hard granular data.” To that end, GFANZ has published a draft Net Zero Transition Plan Framework, now open for comment, including implementation strategy, engagement strategy, corporate governance and more.
We need to manage carbon with the same capabilities and confidence used to manage corporate financial transactions
2) More terms in the “alphabet soup” of acronyms and specialized neologisms in the green finance field. Here’s a new one to me: “SOXification of sustainable investing.” The proposed SEC rule was compared to the System and Organization Controls (SOC) reports that are mandated for public companies as per the Sarbanes-Oxley Act of 2002. A SOC report is a verifiable auditing report performed by a CPA concerning the systematic controls in a service organization. It determines whether financial audits are done according to the controls defined by the serviced company and the effectiveness of the audits. The point is that SOC reporting is an exercise very analogous to what the SEC is proposing regarding climate risk disclosure — so what’s with the complaints from businesses about “onerous” reporting?
“Double materiality” is another term that was invoked by several speakers. Widely used in Europe, this concept is just beginning to be discussed in the U.S. financial sector. Simply stated, double materiality describes how corporate information is important for a firm’s financial valuation and to a firm’s impact on the world at large, particularly concerning climate change. You’ll hear more talk about this idea, and its paradigm-shifting implications, in coming days.
3) Are we setting the bar too high for ESG? Matt Macardi of Free Float Media (FFM) raised this query at more than one panel discussion. Billed as “ESG 2.0 Fact-based Snark,” FFM’s starting point is that traditional reporting is hardly a paragon of credibility and transparency and that only a small percentage of audits of such reports are verified. So why are some critics blasting a promising concept by slamming it for being imperfect? (“Don’t let perfect be the enemy of the good” was a truism voiced often by several speakers.) Good question.
Like all worthwhile conference events, GreenFin 2022 left me with a lot to think about — and to explore in future columns. Watch this space.
Featured photo: Amayah Harrison, Burgundy Visuals/ GreenBiz Group