ESG, net zero and the intersection with the technology and finance sector

In this UK Finance Future of Finance podcast, David Cox, Digital Strategist at Microsoft considered how ESG intersects with both technology and the finance sector - issues of great interest to our Tech Sector, Fintech and ESG teams at Linklaters. By ESG, David is referring to impacts on the planet (carbon, water and waste) (E), but also on people (S), governance and compliance (G). 

He also makes several interesting observations which highlight the importance of data and technology with respect to achieving sustainability:

• Data is the intersection of ESG, technology and financial sector - ESG analysis requires handling massive amounts of data, more than the finance sector is used to, and improving data management is key. The challenge is to bring the same level of transparency of data, trust in that data and technology to acquire and make available that data to the sustainable markets as we do in financial markets. 
  
  
• There are three key elements to an ESG strategy - (1) focus on the sustainability of the business (e.g. with targets for net zero); (2) focus on how to help customers achieve their sustainability objectives (e.g. by helping customers manage and monitor their carbon emissions); and (3) seek out and join the right alliances. ecosystems and consortia that transform the way markets work - to engage, share insights and compare information in order to better analyse and understand ESG risk.
  
  
• Responsibility for ESG starts at the top with the CEO - with a purpose driven mission - and with designated ESG officers. But singe employee in the organisation has a role has to play, whether as ambassador to their customers, manager or part of the business or an individual employee evangelising sustainability within their environment.
  
  
• Cloud is the "connective tissue" that enables business and institutions to collaborate - in order to solve the new problems and to develop new opportunities in sustainability. Cloud delivers scalability and is an important way of capturing the massive amount of data that ESG needs, providing a destination for security and providing access to those who need to manage and monitor that data. Sustainability uses almost every element of technology - from IOT, sensors at the intelligent edge, AI, AR, geospacial analysis - these all come together in the cloud making cloud key to driving sustainable outcomes.
  
  
• With finance as the most regulated sector, regulatory interest and intervention (particularly in the UK and EU) is timely and can have 3 key impacts at scale - (1) providing leadership and setting the agenda for new rules of the road; (2) development of those rules; (3) establishing common standards for the market place backed by ESG and climate risk agendas.
  
  
• Focusing on ESG gives the opportunity for a future where financial markets work for everyone and not just the few - there is the potential for the unlocking of "huge pools of value" - estimated by some at c$12 trillion - of projects that today (mainly in the development world) do not see the light of day, because there isn't enough insight to enable them. Transparency, trust and technology with respect to data will be key to unlocking that potential value.

As ESG continues to climb the corporate agenda, at Linklaters we are also looking at the role of technology in providing solutions and compliance tools for the transition to net zero, and related legal and regulatory issues. In particular we are focusing on the impact of data and technology across 5 key industries: power generation; mobility and transport; the built environment; industrial and business process; and agriculture and food. It also clear that the finance sector will also have key role in supporting business across all industries in making that transition and that fintech will be a part of that. 

See our new Net Zero Tech page on Linklaters.com for details of how we are supporting our clients with developing net zero tech solutions - including a number of case studies - our Fintech page for our fintech offering and Sustainable Futures, our global ESG blog.