NGFS directory aims to fill data gaps

The Network for Greening the Financial System (NGFS) has created a new directory of climate-related information needs and sources aimed at filling financial sector data gaps.

Already live, the online resource is in the final stage of development following a recent public consultation on the web interface and new data sources.

The structured and curated data repository is a practical product of the NGFS workstream on bridging data gaps, set up in 2020. It is intended to help companies, financial institutions, regulators and supervisors find the information they need to identify and manage climate-related risks and opportunities, helping to overcome the established challenges of poor data availability and reliability.

The new NGFS directory has a three-layered structure, under which use cases, metrics and raw data items are recorded and described in relation to each other. This organisation is based on NGFS classification of end users into seven main stakeholder categories and eight main use cases, defining the application of climate-related data for each. Use cases include financial stability monitoring, stress tests, scenario analysis and disclosures. Metrics include transition sensitivity, carbon and environmental footprints, and physical vulnerability.

The directory is fully searchable with a selection of filters available.

Further information about the platform is given in the NGFS’s recently published final report on bridging data gaps, which devotes a chapter to the initiative. Currently, the NGFS directory  references 329 unique metric and methodology combinations, 1,262 raw data items and 748 links to data sources based on the needs of the use cases drawn from stakeholders within the financial sector. However, there are 514 items for which no data source could be found, highlighting the substantial gaps that remain.

The report also reviews lessons learned in the development of the directory, outlining the data gaps and challenges that remain. These include the need for data audits, increasing the amount of more granular data, and greater capacity to understand science-based metrics and the methods of different providers. The very limited availability of forward-looking data is also a problem, especially for transition risks.

Nevertheless, the creation of the directory represents a major milestone in the provision of the practical and decision-useful data that underlies all climate-related disclosures and the identification and management of climate risks.

The NGFS sees the directory as a “public good” and a “living tool”, designing it to be easily accessible by stakeholders within the financial sector and the general public in both advanced and emerging market economies. It also intends to build on the initiative to propose practical solutions and policy recommendations in due course.