The big green financial issues — divest vs. invest, disclosure standards and, of course, ESG — were hot topics at GreenFin23.
I’m still mulling over the brain dump of insights from the annual GreenFin conference held in Boston at the end of June this year. I have 90-plus pages of notes filled with enough ideas to keep me thinking through the dog days of August.
The annual three-day event is very popular, prompted by the explosive growth of activity in the sector. Attendance is up 25% this year, with nearly 1,000 attendees at the Boston event. It was a lot to take in.
The hard work of getting stuff done
After years of talk, the talk of finance is now implementation. So things are getting complicated. They have, indeed — but that’s not a bad thing.
It’s what happens when high-flying concepts turn toward the grind of execution. Participants compared notes, offered analysis, and mapped paths forward through the tangle of increasingly reality-tethered strategies and practices. Sound wonky? Maybe. But it’s important to see how the sausage is made.
See our related story: “CSRDl, CSDDD, ESRS and more: A cheat sheet of EU sustainability regulations”
The conference was bookended by two significant announcements. As it opened, the International Sustainability Standards Board (ISSB) released its first two sustainability disclosure standards, for general requirements for sustainability-related financial information and for climate-related disclosures. Launched at COP 26 in Glasgow, the ISSB has amalgamated previous work by several entities with the goal of establishing a comprehensive global baseline of sustainability disclosures focused on the needs of investors and the financial markets. In so doing, it has condensed the “alphabet soup” of competing and overlapping frameworks and standards (CDSB, TCFD, SASB, and the Value Reporting Foundation) into something like a unified program. At GreenFin 23, this announcement was hailed as a crucial first step toward the holy grail that investors have long clamored for: harmonized ESG reporting standards.
How is this potential disjunction between American and other financial systems going to work out?
What is next for green disclosures?
The announcement immediately raised the question of “what’s next”?
The elephant in the room is the long-delayed rule by the Securities and Exchange Commission on climate disclosure. Originally expected earlier this spring, the proposed rules have attracted feedback of a record 15,000 comments, causing the regulator to consider “adjustments.” A decision is now projected to be announced in October.
The big issue is this: ISSB standards are being readily adopted in European and UK countries. Since the details of the SEC proposal are unknown, and since the U.S. is beset by an ESG backlash of an intensity not seen overseas, the question is how to reconcile possibly conflicting rules and regulations to fully achieve a common global benchmark?
Finance is global, and green finance markedly so. How is this potential disjunction between American and other financial systems going to work out? The consensus seemed to be that the pressure of market demand — the flood of investment funding, from the Inflation Reduction Act to sovereign wealth funds that continues to flow into all forms of green finance — would cause some sort of accommodation by fiat.
Larry Fink
A contrarian note was sounded on the morning of the last day, when news broke that BlackRock CEO Larry Fink would no longer use the term ESG as it has become “weaponized.” While chat about the pullback from “Mr. ESG,” was quizzical, no one doubted that where and when BlackRock saw a portfolio company’s exposure to ESG factors as material that the firm’s decision-making would include them. “To ignore ESG considerations would be a breach of fiduciary responsibility, argued speakers and attendees,” explained GreenBiz Editorial Director Heather Clancy.
ESG
Ah yes, ESG. It was top of agenda for keynotes, panels, and attendees alike. You can read more about that conversation here.
I’ll note two things you would not know if you weren’t there. One, there was an ongoing, robust conversation about the divest vs. invest issue with divestment getting a fresh boost by the retreat by fossil fuel companies on earlier carbon cutback pledges a “How do you engage if the other party is walking away from you,” was the constant refrain, informed by the recent moves by the oil and far companies.
The situation seemed to buttress the arguments of the divest movement — for now.
The changing face of green finance
Another reveal was the diversity among attendees on display. The conference was visibly tilted toward a large cohort of a younger demographic, with a robust representation of women. Something about DEI programs is working out for women in the green finance sector.
Why aren’t we calculating the actual investments that a business or organization is putting into sustainable practices?
Perhaps my favorite moment of the entire conference was the session that touted the Emerging Leaders program, 10 representatives of the next generation of Black, Indigenous and other leaders of color (BIPOC) in the climate-related community. Sparked by the program’s leader, Bryan Lewis, the session was markedly informal but intense, with the audience seated in a circle and in-depth discussions of such thorny issues as “imposter syndrome.” It elicited frank comments about what it feels like to be a minority in an overwhelmingly white sector of business activity. The energy and insights generated by this group of smart, dedicated young professionals was downright inspiring. You’ll be hearing more about them in future reports.
Wild card moment
And one wild card note: bubbling under in casual conversations was an idea I hadn’t heard before: instead of all these debatable measuring systems to ratify progress toward net zero by some far-off date, why aren’t we calculating the actual investments that a business or organization is putting into sustainable practices?
It’s a play off the old investment maxim that financiers need “skin in the game” rather than green credits, offsets, and compliance directives.
That’s the kind of unexpected twist that only an in-person conference can deliver. Bottom line: There’s some sand in the gears but the green finance train is moving full speed ahead, whether Fink likes it or not.
For more coverage of GreenFin 23, click here.
Featured photo: Bryan Lewis speaking at GreenFin 23. Source: GreenBiz
