We were at the forefront of these discussions. Three NatWest ESG specialists – Caroline Haas, Head of Climate and ESG Capital Markets; Dr Arthur Krebbers, Head of Corporate Climate and ESG Capital Markets; and Tonia Plakhotniuk, Policy and Regulation Lead in our Climate and ESG Capital Markets team – were invited to contribute on various panels, covering –, amongst other topics, – sustainable investment strategies, ESG compliance, and the evolving role of ESG data and AI to support sustainability strategies and disclosures. 

• Discussions centred around the development of transition plans sand transition finance strategies, with an emphasis on how just buying already green assets can be counterproductive.
• There is growing demand for social themes focusing on a just transition, especially in the global south. Therefore, to ensure a real economy transition, regulators need to have a closer look at initiatives they can engage with in the southern hemisphere – recognising the fact that climate change is global. 

• Some conference speakers argued that investors are too focused on “micro engagement” with corporates rather than spending more time engaging governments and SSAs around their climate commitments and policies – noting that most net-zero investor initiatives explicitly include references to their reliance on government policy and the clear stewardship role the buy-side has.
• There is a call to raise the level of engagement and thinking beyond corporate disclosures to include country-level transition plans and macro-level policy changes that support sustainable finance and address market failures.

• EU Taxonomy expansion: the EU Commission representative indicated the intention to expand the Taxonomy to include under-represented economic activities, including R&D, enabling activities, and transitioning activities. Such an expansion, of course, will depend on the make-up of the next EU Commission post European Parliamentary elections.
• Sectors such as Telecoms and Consumer have also expressed their concerns at not being sufficiently represented.

• Amidst a more fragmented macro backdrop, there's a push for global convergence of sustainable finance regulations to ensure comparability and interoperability. However, different regions have varied priorities and contexts, making this task very complex. Having the International Sustainability Standards Board (ISSB) will help over time to harmonise sustainability reporting, but it should not be seen as a cure for all differences. Jurisdictional variations will likely remain and will have to be embraced.
• Interoperability is crucial not only in regulations but also in data and systems to streamline reporting processes and ensure consistency across different jurisdictions.
• In addition, the perceived complexity of the current sustainable finance regulations, including the EU taxonomy, Sustainable Finance Disclosure Regulation (SFDR), and others, calls for efforts to simplify these frameworks to make them more easily usable for companies and financial institutions. There are, however, some concerns that simplification could be at the detriment of effectiveness.

• The regulation of sustainable finance products needs to balance investor protection with flexibility and innovation. This includes allowing for various investment strategies, from exclusion of fossil fuels to engagement and proxy voting.
• With regards to nature investment strategies, there is a multi-billion dollar funding gap in nature and biodiversity annually, highlighting the need for public and private institutions to invest in nature.
• Mobilising private capital for public goods - such as nature - is difficult due to the challenge of explaining its materiality to companies and investors. But awareness for nature is increasing with the Global Biodiversity Framework (GBF) and the Taskforce on Nature-related Financial Disclosures (TNFD) having seen numerous early adopters. 

• ESG data was compared to “the financial data of the 1920s”. There is still a development and harmonisation journey, while noting that even financial data today is subject to different accounting standards.
• Technology, particularly AI and cloud solutions, will play a crucial role in addressing data gaps and enhancing climate risk management.
• Novel data sources, like geospatial data and predictive analytics, are being utilised to monitor and manage environmental risks more accurately, supporting better decision-making and reporting. Speakers referred to the fact that there is almost enough information but that the quality isn’t good enough: “We need better data, not more of it.” 

If you would like to discuss any of the topics raised at the AFME conference, please contact a member of our team.