NGFS: Final Report on Bridging Data Gaps

This report from the Network for Greening the Financial System (NGFS) reviews the urgent need for more and better climate-related data. It also introduces a new directory of data sources and concludes with calls for consistent and comparable global disclosure standards and green taxonomies.

Preceded by an interim progress report published last year, this is the final product from the NGFS’s workstream on data gaps, chaired by the European Central Bank’s Patrick Amis and Fabio Natalucci of the International Monetary Fund.

The report begins by highlighting the need for quality data that is comparable and useful in decision making, which continues to be a major issue for the identification, mitigation and management of climate-related risks. It goes on to provide a comprehensive review of new public and private initiatives to improve data availability and quality.

There have been rapid developments in analytical tools and methodologies since Cop26, it finds, with policy work focusing on standardising environmental social and governance information and disclosure and on designing sustainable finance classifications and taxonomies.

However, the report makes clear that substantial challenges remain. These include the diversity of classification and reporting frameworks are not interoperable, the disclosure of forward-looking information remains limited, and data availability for smaller enterprises remains scarce, as well as increased risk of greenwashing. It also calls for further work on issues specific to emerging markets, including transition-related concerns and the intertwined financing needs for mitigation and adaptation to climate change.

The report then reviews the NGFS’s new directory of climate-related data sources, currently under development following a recently completed consultation. Presented as a “practical solution to help to bridge the gaps”, the directory outlines available climate-related data based on the needs of financial-sector use cases.

An evidence-based review identified nine key and interrelated challenges for data provision, along with a total of 1,262 raw data items required along with referenceable sources for 748 of these. The report also identifies lessons learned from the development of the directory about how it could be used to address climate-related data challenges.

The report concludes with three core recommendations for improving the quality, availability, and comparability of climate-related data. First, convergence towards a common and consistent set of global disclosure standards can be fostered by intensifying discussion among regulators and stakeholders and by increasing reporting requirements for non-financial corporations.

In addition, similar cooperation and coordination is needed to develop mutually shared principles for taxonomies and sustainable finance classifications.  Finally, harmonisation of forward-looking metrics can be enhanced by agreement on well-defined and decision-useful metrics and methodological standards.