ROME, September 30, "Bold and urgent" international coordination is needed to make data firms provide on environmental, social, and governance (ESG) indicators more robust and prevent greenwashing," Italy's central bank head said on Thursday.
Investors and environmentalists have expressed concerns that firms might get better ESG ratings than they deserve because of data that makes them appear more sustainable than their real-world counterparts, due to a lack of regulation to strengthen ESA indicators.
"The fact that there is no obligation to supervise firms' non-financial communications, the absence of standardised indicators... leave room for firms to attempt to alter the external perception of their sustainability in order to attract funds," Ignazio Visco said at a conference.
Visco stated that "bold and urgent" coordination was needed at the international level to provide better data to measure the impact of climate change on the economy and financial system.
The volume of money that flows into funds on the basis of companies' ESG scores has risen dramatically, but authorities are concerned about the data's lack of reliability and comparability.
"Sustainable finance has grown substantially in a few years, to the point that one might wonder whether this growth is itself viable," Visco explained.