How Automated ESG Scoring Will Help Banks and Businesses Navigate Impending Regulations

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Since the UN announced the Paris Agreement in 2015, analysts and commentators have discussed the many implications of the underlying aims across global industries. During COP26 at the end of 2021, there was an urgency to maintain momentum as the 2030 deadline looms closer. Time is running short for a solution, and automated ESG scoring technology offers a valuable mechanism for the industry to move forward with an intuitive scoring system that works to help banks and businesses avoid penalties from regulators and manage reputation in a true and objective way. 

What are the United Nations Sustainable Development Goals & What do they mean for ESG Regulation in Banks and Businesses?

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In essence, any resolution to the problem means moving from punitive solutions to ones that “nudge” behaviours. This resolution means taking our aspirations and goals to deliverable and measurable actions. In essence, the UN has outlined exactly ‘What’ we need to measure to become globally sustainable and has given us guidelines from which we can map all ESG (Environmental, Social & Governance) activity.

ESG Regulation Tracker and Deadlines

The Paris Agreement states that “To stay below 1.5 °C of global warming, emissions need to be cut by roughly 50% by 2030”. Everyone, from policymakers and regulators to banks and investors will need to understand the symbiosis between the planet, economic activity and economic development. This is an age-old geopolitical problem in the true sense of the word – a conflict over resources between nations, social groups and individuals, and the failure to resolve it is perhaps because of its intractable and universal nature.

A mild improvement in exports masks ongoing market turmoil: Quarterly UK Exporter Monitor, Q1 2022

A mild pick up in the UK’s month-on-month exporter counts and revenues in March 2022 masks a more worrying picture of the impact of Brexit on exporters over the past 12 months. Exporter counts and revenues have gone up by 2.33% and 2.99% respectively across all UK regions in March 2022 compared to February 2022.

However, using a 12-month moving average, the numbers of exporters has dropped by 0.6%, their revenues by 0.7% and their employment by 1.3% and comes on the back of declines in February and projected declines in May and June after a small projected increase in April.

Why Bankers and Traders Need to be Aware of ESG and Sustainability

Over the last ten years, ESG (Environmental, Social and Corporate Governance) has slowly become one of the most critical factors for companies to consider when making business decisions and strategising for the future. For banks and traders, it covers a range of factors, from a company’s carbon dioxide footprint to its labour practices and policies to corruption. Research is increasingly showing that companies with a strong focus on improving their ESG impact and operating more sustainably achieve greater financial results.