International policy conferences generate predictable spikes in media coverage and public policy posturing. They can also serve as action-forcing events as policymakers prepare to take the global stage. These large events generate incentives for policymakers to announce new initiatives in order to exert normative leadership or, at least, arrive at a global event with a deliverable in hand.
Accelerating progress regarding the climate transition requires financial regulators to create requirements for firms to disclose climate-related risks, undertake enforcement actions to combat greenwashing, and create supportive structures that facilitate investment in a broad range of renewable energy sources, storage, and transmission mechanisms.
The COP27 event -- occurring simultaneously with the G20 summit -- has disappointed most climate policy advocates and observers. Our award-winning, patented technology quantifies the scale of the challenge as the COP27 sessions draw to a close.
Greenwashing and Climate Disclosure Policy -- Quantified
Greenwashing policy and climate-related disclosures policy represent two sides of the same coin. Greenwashing policy seeks to increase the information quality and honesty regarding climate-related disclosures. But for greenwashing policy to generate incentives for greater transparency, many believe the disclosure framework itself must be updated
The COP27 sessions have triggered a spike in policy activity regarding both sets of issues.
For greenwashing, the scale of activity so far in November 2022 is roughly the same as the scale of activity around the last COP sessions.
Markets will be disappointed on the disclosure front, however. October activity levels were elevated as policymakers pivoted towards COP27.
The UK, Australia, Japan, and the Financial Stability Board all issued significant statements and reports regarding climate-related disclosures. Two different speeches from SEC officials generated hope among some that the spring 2022 disclosure proposals would generate final rules in time for the mid-November COP27 sessions. Instead, the SEC re-opened the commentary period due to technical difficulties in receiving comments on this (and other, unrelated) regulatory proposals.
Green Transition and Renewables Still Generating High Action
Policymakers continue to ring alarm bells regarding the need to accelerate the Green Transition and generate market support for renewable energy projects. Media attention to these initiatives remains relatively low for a simple reason: none of the initiatives generate binding regulatory requirements:....YET
Even the World Trade Organization (WTO) and the International Organization of Securities Commissions (IOSCO) have engaged on the topic. The WTO is making the case for clean hydrogen and for making cross-border trade in stored renewable energy more cost-effective. IOSCO has issued new recommendations for how to improve regulatory standards governing emissions trading systems.
Bottom Line: Regulatory frameworks are drawing a jagged line towards a more sustainable future. The policy process to provide scaffolding to support growth in climate finance remains frustratingly slow.
Persistent and growing gaps between investor demand for increased transparency will continue to hobble the capacity of private markets to allocate capital efficiently, effectively, quickly, and at scale.
Shifts in regulatory standards along the way (even at the current glacial space) create risks for existing portfolio positions.
Our award-winning, patented process that measures momentum in the policy process across a broad range of climate-related policy initiatives, bridging the gap between these verbal risks and the quantitative process for projecting forward investment risks.
Our tickerized data aligns with automated investment processes, enabling strategists and investors to draw a direct line between observed policy volatility levels and a broad range of tradeable market instruments.
Users that also access the underlying structured language (in machine-readable format or highlighted PDFs for human readers) will connect the dots and identify strategic opportunities more efficiently.