Through all the sessions, conversations, and content, we left with a few lessons.
Introduction
This year’s Greenfin conference returned to New York City. The three-day event hosted over 1,000 sustainability professionals ranging from investors, bankers, corporate sustainability executives, marketing professionals, and investment policymakers. It offered attendees the opportunity to discuss a range of ESG and sustainability topics from financing large renewable energy projects to human rights due diligence, to the responsibility of marketing departments towards sustainability. As always, networking opportunities were plenty, and education sessions were filled with valuable content.
At a conference filled with hundreds of sustainability professionals and a myriad of educational sessions, there were many perspectives shared on how to most effectively harness the power of capital markets to achieve a net zero economy and do so transparently. Through all the sessions, conversations, and content, we left with a few lessons.
Investors are increasingly focused on understanding the emissions impact of their financial decisions. Reporting has become a top concern for investment managers, and calculating financed emissions is a challenge. On top of that, there is uncertainty around how regulations governing these reporting requirements will evolve. As it is, banks reporting on financed emissions are doing so under regulatory pressure and reporting requirements. What they want to see is that the emissions intensity of their investments (MT/USD invested) is decreasing over time. At GreenFin, experts delved into their approach while exploring the path toward more transparent and impactful reporting.
While there is lots of uncertainty around the regulatory environment, the financial community remains optimistic. Despite some resistance surrounding reporting and regulatory requirements, sessions notably mentioned that 90–100% of institutional investors who commented on SEC rulings expressed support for those reporting measures, emphasizing that the requirements are about getting better information, not politics.
In the past, the SEC faced skepticism when it mandated the auditing of all financial information—a requirement that initially seemed too challenging and costly. However, as 81% of the Russell and 99% of the S&P disclose sustainability metrics (with 65% providing some form of voluntary assurance), the landscape is shifting. While reporting has traditionally been voluntary, there is now more transparency and with that, more accountability than ever.
While the statistics give reason to be optimistic, it is important to understand that constant change and uncertainty remain areas of concern as regulations continue to evolve. The solution: The more the industry can consolidate and make reporting easier through standardization, increased data accessibility, and leaning into AI and technology, the clearer the practice will be.
We can’t let arguments over terminology impede progress. Terms like ESG and Transition Finance continue to evolve as the industry matures. While the components that make up these terms issues are not novel, their convergence and evolution are. At GreenFin, diverse perspectives emerged regarding ESG’s definition. Some viewed it as an extension of Corporate Social Responsibility (CSR), while others emphasized its social impact. However, the prevailing definition is that ESG serves as a risk management tactic. By addressing climate, social, and governance risks, businesses can mitigate the impact against them.
Many attendees expressed confusion around what constitutes Transition Finance and concern that the terms may be misused or further contribute to greenwashing. The key piece of advice was to defer back to the Glasgow Finance Alliance for Net Zero’s four key strategies for screening financing opportunities and determining an investment’s contribution to Transition Finance: Climate Solutions, Aligned or Aligning, and Managed Phaseout.
Beyond the definitions are the names themselves. According to recent data, 96% of investors support ESG practices, yet over 75% of Americans remain unfamiliar with the term “ESG.” It’s also likely no stretch to say there is a similar lack of understanding in the public of Transition Finance. These conversations and the emerging landscape reminds us of how critical centralization is. Standardized reporting and a unified understanding of best practices are essential to progress.
Other notable investment matters:
- 90% of clean energy investment is going towards solar, wind, and storage; more financing is needed for emerging technologies.
- Climate resilience is considered a growth area and climate change risk assessments will be required by lenders for all projects.
- When considering investments, you must take a global view of regulations.
GreenFin showcased the growing ESG industry and the dedication to achieving a net-zero economy. The financial community is increasingly focused on emissions impacts, transparency and disclosure, and emerging potential regulations. As we look ahead, it’s evident that these topics are here to stay; now, more than ever, DNV is dedicated to and aware of the criticality of staying ahead of these evolving trends.
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