“Are green bonds Potemkin villages?”

Dutch MEP Paul Tang set the tone by comparing oil and gas companies' sustainability ambitions to Potemkin villages, stating that if these companies continue to invest in fossil fuels, they cannot be green. He then asked the audience if O&G companies were doing enough. Tellingly, not a single attendee said they were.

Alessandro Canta of Enel, a sustainability-linked bond issuer, pushed back against panellists who expressed fears of SLB issuers missing their KPIs, stating that missing a target enforces the mechanism of the instrument, and that if all issuers were hitting their KPIs, something would be wrong with the market.

“The demand for [Saudi] oil will continue because costs are lowest, it's about how we do it responsibly”

Things took a critical turn when a representative from Saudi Arabia's Ministry of Energy attempted to pitch the Kingdom's net zero plan. However, a panellist expressed scepticism towards transition plans that rely on non-existent technology, specifically referring to the Kingdom's carbon capture plan. The audience then quickly questioned the Kingdom's human rights record and inconsistent actions towards decarbonisation, causing the Saudi panellist to acknowledge the audience’s "warm welcome”.

“If [The EU Taxonomy] is not the gold standard at least it is the starting place”

The conference also addressed concerns about changing guidance to the EU's Sustainable Finance Disclosure Regulation and the incomplete Taxonomy, with universal interest in how the EU's Green Bond Standard will shape up, and the need for a regulatory standard to guide use-of-proceeds and weed out companies looking to exploit the 'greenium'.

A representative from the UK's Financial Conduct Authority praised the UK's early endorsement of the ISSB reporting framework, despite recent criticism surrounding the regulator's handling of the UK’s Sustainable Disclosure Requirements (SDR) and Client Earth's recent litigation against the FCA. These words appeared to do little to qualm the other panellists’ fears about regulatory fragmentation and an unequal playing field between the UK and other jurisdictions. 

“ESG data providers are becoming more powerful and critical but they don’t have the same regulatory oversight as other data providers”

Investors' frustration and growing scepticism with ESG data was also present, with concerns about a lack of standardisation, the complexity of monitoring environmental and social impacts, the growth of ESG rating consolidation, and the absence of regulatory oversight.

Two asset managers stressed the importance of qualitative and internal analysis, with one stating that “second party opinion or not, we will still apply our own internal perspective”.

These concerns culminated in panellists and the audience rallying around the idea of ESG data being freely accessible.

Although macroeconomic issues may be drawing attention away from ESG, the quality of conversation was high. It was also clear from investors, issuers and data providers, that demand for sustainable products, financing, and data tools remains strong as regulation strengthens and investors increasingly demand insight into the ESG performance of their assets.