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SHUFFLING DECKCHAIRS ON THE TITANIC: IS ESG A REDUNDANT CONCEPT? 


THE ISSB'S INAUGURAL GLOBAL SUSTAINABILITY STANDARDS HAVE BEEN WELCOMED BUT SOME
INDUSTRY EXPERTS AGAINST TOO MUCH FOCUS ON STANDARDISATION WRITES POLLY BINDMAN.



Credit: Shutterstock




Ever since environmental, social and governance (ESG) became ubiquitous in
corporate life, it has faced resistance from all directions.


ESG detractors from the movement such as former BlackRock executive Tariq Fancy
called ESG investing a “dangerous placebo that harms the public interest”, while
in the US, a fully fledged backlash has emerged in recent months against the
mode of investing that incorporates social and environmental considerations into
decision-making. 

It is in this context that the 2023 CEE Sustainable Finance Summit, organised by
the International Sustainable Finance Centre think tank in Prague and attended
by GlobalData, held an ‘Oxford-style’ debate where participants argued over
whether ESG investing is truly a “paradigm shift”, or an “outdated concept that
needs to go”. 

Arguing for the continued relevance of ESG investing was Maxfield Weiss,
executive director for Europe of global environmental disclosure platform CDP,
and Margarita Pirovska, director of policy at the Principles for Responsible
Investment (UN PRI), a global network of investors that in early 2021 had
$121trn (€110.7trn) in assets under management. 

Weiss kicked off the debate by arguing that the practice of measuring and
disclosing ESG risks is already routine, as opposed to something up for debate. 

“In a world of increased scrutiny, standardisation and regulation, environmental
reporting is now a business norm,” said Weiss, noting that this “paradigm shift”
was “pioneered by CDP”, which over the past 20 years has garnered the support of
almost 20,000 companies representing half of global market capitalisation,
playing a “foundational role developing, mainstreaming and standardising ESG
disclosure”. 



One of the main criticisms levelled at ESG investing over the years is that
divergent reporting methods and frameworks used by corporates to gather ESG
data, along with an ‘alphabet soup’ of voluntary bodies tasked with assessing
this data, has led to a lack of consistency, rendering these assessments next to
useless. 

In response to the demand for comparable data, the IFRS, an international
non-profit responsible for developing global accounting and sustainability
disclosure standards, established the International Sustainability Standards
Board (ISSB) at COP26, with the goal of "fulfil[ling] the growing and urgent
demand for streamlining and formalising corporate sustainability disclosures". 

Having garnered the support of governments globally, the ISSB published its
first set of standards in spring 2022, and following a lengthy consultation
process, released a final set of standards on 26 June. 

The ISSB’s standards comprise two parts: IFRS S1, which proposes companies
disclose information about all their "significant" sustainability-related risks
and opportunities, as well as IFRS S2, which focuses only on climate-related
risks and opportunities, incorporating the recommendations of the Task Force on
Climate-related Financial Disclosures. 

Relevant industry bodies from around the world have responded warmly to the
ISSB’s release of its inaugural sustainability standards for ESG investing,
which will be used by corporates and financial institutions everywhere. For
example, Sacha Sadan, director of ESG at the UK’s Financial Conduct Authority,
which has been “working closely with the ISSB since the start”, said he was
"delighted to see" the launch of standards that aim to “create a common, global
language for companies around the world to communicate their sustainability
stories in a consistent and comparable way”. 

Other groups welcoming the ISSB’s standards, via a press release sent by the
ISSB, include the Group of Latin American Accounting Setters, the Financial
Reporting Council of Nigeria, the Financial Accounting Standards Foundation of
Japan and China's Ministry of Finance. 

“There is no pulling back,” said Weiss of the ISSB’s standards during the
debate. “ESG reporting underpins the capital markets, [requiring] consistency of
information and consistent quality data.” CDP announced in November 2022 that it
would incorporate the ISSB’s standards into its own methodology. 

The UN PRI’s Pirovska concurred that there is “no going back” – noting that to
reach Paris Agreement goals, "We need to change the whole spectrum of
regulation, frameworks, rules of the game – that includes what information
market participants give to investors – until two decades ago that was largely
financial information." 

Pirovska noted that what really matters is the “interoperability” of different
regulatory frameworks, which is a word frequently employed by the ISSB to refer
to how its standards will align with those simultaneously being developed in
specific jurisdictions. 

For example, the European Financial Reporting Advisory Group (EFRAG) proposed
its European Sustainability Reporting Standards last year, which make up a key
provision of the EU Corporate Sustainability Reporting Directive that applies to
all “large” EU companies, listed SMEs with revenue of more than €20m and non-EU
companies operating in EU markets with a turnover of more than €150m. Across the
pond, the US Securities and Exchange Commission is developing its own rules on
climate-related disclosures. 





ESG INVESTING: ARE THE ISSB’S STANDARDS ENOUGH?

Achieving interoperability across these divergent standards, each of which are
still being developed, is a complex and time-consuming process spanning many
years. Given the urgency of climate breakdown, some have questioned the logic of
waiting until we have perfect data to act on decarbonisation. 

During the CEE Summit debate, Sean Kidney from the Climate Bonds Initiative
argued that there is a “terrible risk" that the ISSB discussion "is somehow
enough”, noting that while discussions around standard setting are “useful”, we
need to focus on “how we get to the future we so urgently need to avoid
catastrophe”. 

Underscoring the urgency of cutting emissions, rather than focusing on the best
methods of calculating them – given the “freight train of climate change coming
down the road” – Kidney argued that engaging in lengthy discussions about
standards and comparable data “is like shuffling deckchairs on the Titanic”. He
echoed Tariq Fancy’s assertion that “the glowing promise of 'ESG integration'"
is that it "offers better ways to pick out the more sportsmanlike players" as
opposed to delivering real-world impact. 

Iancu Daramus, director of climate-aligned investing at Fulcrum Asset
Management, said: “We have enough data to act. To some degree, I think the
excuse around imperfect data is occasionally used disingenuously." 

In a 2021 piece in the Harvard Business Review, Kenneth Pucker, senior lecturer
at the Fletcher School at Tufts University and former COO of shoe brand
Timberland, made the case that heightened disclosure of ESG metrics by companies
can be evidenced as a distraction with little real-world impact by the fact that
the increase in the number of companies reporting climate data has not been
matched by a decrease in global emissions. 

While a crude measure, the failure of global companies to significantly reduce
their emissions since the Paris Agreement was agreed in 2015 raises an important
question as to the utility of obsessing over ways of reporting on data as
opposed to using whatever methods we have to set firm and meaningful targets. 

Pucker concludes his article by writing: "Unfortunately, Sustainability Inc.’s
[sic] focus on measurement and reporting – and the underlying premise that
market-based change would be sufficient – has likely helped to delay these
much-needed structural transformations." 





THE SCOPE 3 CONUNDRUM 

One area that remains a work in progress for the ISSB, and which causes
particular grievance to asset managers when it comes to a lack of data, is scope
3 indirect emissions, which for many businesses account for more
than two-thirds of their carbon footprint. 

According to an October 2022 report from financial data provider Morningstar,
which assessed the responses of a group of major asset managers with a combined
$40trn in assets under management to the ISSB’s consultation on its initial
standards, scope 3 was a key dividing line, with US asset managers more likely
to advocate for limited or deferred requirements for scope 3 emissions. 



“Scope 3 [emissions] is a difficult topic," Pirovska tells Energy Monitor in a
follow-up interview after the conference. “Many companies say it is too
difficult to estimate and they don't have enough data… but at the same time, the
[latest] IPCC report has given us a last warning that... we have to start doing
something now. And so, figuring out the collective burden of scope 3 emissions
throughout the economic value chain is extremely important." 

“This is what the EU is doing,” she adds, with EFRAG currently proposing that
companies use a combination of methods to apportion responsibility for these
emissions, using "primary and secondary data ranging from precise figures
(supplier-specific or site-specific methods) to extrapolated figures
(average-data or spend-based methods)". 

EFRAG is working with the ISSB to incorporate the latter's "building blocks"
into its own standards for ESG investing. The ISSB confirmed in October 2022
that it would require scope 3 disclosure and set this out in its draft
Climate-related Disclosures Standard. 

In a recent interview, ISSB chair Emmanuel Faber said respondents to the ISSB’s
initial consultation made clear that while scope 3 reporting is important for
investors and bankers, it is "challenging for companies, in particular because
of the need to map their overall value chain". 

As a result, the ISSB has provided companies with an additional year to include
scope 3 information, and is providing them with support and guidance. 

The ISSB also agreed to confirm requirements for financed emissions to help
banks and asset managers with their own version of scope 3. Currently, a small
handful of banks report their financed emissions, although the lack of a
standardised approach is leading to discrepancies. 

In a June analysis, US-based non-profit the Environmental Defense Fund (EDF)
assessed recent scope 3 disclosures from major US banks Citi and JPMorgan Chase.
It found that Citi showed "a striking 30% decline in absolute emissions in its
oil and gas portfolio from the previous year, but a slight increase in emissions
intensity", while JPMorgan Chase "did not disclose absolute carbon emissions
from oil and gas but showed a slight uptick in emissions intensity". 

These results "are difficult to make sense of", says EDF, as it is unclear how
Citi's absolute emissions "could fall so sharply, while its emissions intensity
rose". The non-profit also questions how investors can hope to compare Citi’s
performance with its peer, which did not report absolute
emissions. Acknowledging that disclosure has improved considerably over the past
few years, the "bad news", the briefing states, is that climate reporting from
banks is "still inconsistent and confusing". 

"There is a lot of data out there," sums up Pirovska. "What you want is to make
sure that this data is standardised, is comparable, is investment grade.
Therefore, you need some standards.” For her, the ISSB’s standards will bring
efficiency and clarity to the market “and will make sure that everybody is
reporting in the same way on the most baseline data point, which is CO2;
emissions”. 









11/17/2023 13:53:44

Interview


“WORKING FOR A COMPANY THAT VALUES WORK-LIFE BALANCE IS CRUCIAL” 


LYNDA STRUTTON, COO OF TRIBE PAYMENTS DISCUSSES GENDER DIVERSITY AND BALANCING
HOME AND WORK LIFE IN THE FINANCIAL SERVICES INDUSTRY WITH ROBERT PRENDERGAST.



Credit: Shutterstock




Deloitte’s 2022 report delivered a stark message about the state of gender
diversity in the financial services industry. Statistics showed that women were
occupying just 21% of board seats, 19% of C-suite roles, and a mere 5% of CEO
positions.

Progress has been made over the years towards greater gender diversity but the
numbers speak to a broader issue, underscoring the need for more concerted
efforts to support and promote women in the financial sector.   

Lynda Strutton, Chief Operating Officer of Tribe Payments, discusses with RBI
her career in the male-dominated fintech sector, her experiences supporting
gender diversity and her insights into achieving that all-important work-life
balance.  





RBI: CAN YOU PLEASE TELL US ABOUT YOURSELF AND YOUR CAREER TO-DATE?  

Lynda Strutton: I began my career in payments over a decade ago. During that
time, I’ve had the privilege of working across Europe to the Middle East, taking
on senior positions at the likes of Barclaycard, Elavon and Network
International.  


Lynda Strutton, Chief Operating Officer of Tribe Payments





I joined Tribe as VP of Customer Success at the start of 2022 before moving into
my current role as COO, where I oversee all commercial, marketing, operational
and product output. I was particularly proud of this promotion to C-suite, which
I secured while pregnant with my fourth child. I actually wrote a blog post on
the topic, “Promoted While Pregnant,” to provide guidance for other women who
may be concerned about advancing in their careers while starting a family.


A significant part of my focus centres on building and leading high-performance
teams to drive company growth. For example, one of the biggest achievements was
taking over a product team where we achieved 100% revenue growth within two
years from only existing products. I believe in rallying a team around a shared
vision, ensuring they understand the “why” behind our goals. It’s important to
me that I cultivate a growth culture, empower individuals to realise their full
potential, and nurture personal development within my team through coaching and
leading by example.





RBI: HOW HAS DIVERSITY IN THE PAYMENTS INDUSTRY CHANGED OVER THE PAST DECADE?  

Lynda Strutton: Since joining the industry, I’ve definitely witnessed noticeable
improvements in diversity. More women are entering the field, and the rise of
female-focused networking and support groups is a positive development. I do
feel a lot of the younger women I meet with now are much more confident in
speaking up and saying when something isn’t right. This is something that
certainly took me a long time to feel confident in doing, but it’s such an
important step. I think a lot of discrimination in our industry happens
unintentionally and pulling people up on these behaviours is something we all
need to continue to do. 

However, there’s still plenty of work to be done, especially in supporting women
to reach senior positions. The stats prove this, with only 5% of CEO seats in
our industry taken by women. For many women, their career progression and when
they start taking more senior roles often ties with when they may want to start
a family, so how do we support them to do both? 

We also need to address the dominance of men in networking events, making sure
that women have the confidence to be in the room will help to break this down.
It’s very normal for me to be the only woman in the room or at the table. This
won’t change overnight, so it’s important for women to feel comfortable with
this and for men to recognise that it’s also their responsibility to make sure
everyone feels included. 





RBI: YOU HAVE FOUR CHILDREN AND A SUCCESSFUL C-SUITE CAREER. HOW DO YOU MAKE
TIME FOR WORK, FAMILY, AND YOURSELF?  

Lynda Strutton: Balancing work, family, and self can be a challenge. To say I
have it all figured out would be a lie. I have a few tips to create the best
possible sense of equilibrium (at least for right now).  

Firstly, I’ve found that working for a company that values work-life balance,
the happiness of their employees, and supports flexible working patterns is
crucial. I feel very lucky to have found this at Tribe. You can’t
underestimate what a difference this can make in both your ability to build your
career and navigate being, and feeling like, a good mother.  

I also acknowledge that my guilt is normal, you just have to roll with it. The
quicker that you accept that you’ll always feel that way, the easier it is to
manage. Of course, it can be tough when you have to travel for work and miss the
school pick-ups or things that the children are doing. But there are also huge
benefits for my kids, and I make sure that I’m fully present with them when I am
there.   

Balance is crucial to make sure you don’t miss out on everything. This is the
same for all parents, regardless of their gender. For me, this looks like:
making sure that I go to breakfast every week with the kids at school, go on at
least two pick-ups a week, and ensuring that we have trips away together. I also
make sure that the important school things are in my diary. 

Don’t be afraid to ask for help. This is a big one for me that I initially found
tough to admit. I think we naturally want to manage it all, but this isn’t going
to help you find the balance you need. Planning with my partner and involving
family or friends makes it manageable. Lastly, and most importantly, be kind to
yourself.   





RBI: WHAT HAVE YOU DONE IN YOUR CAREER TO PAY IT FORWARD FOR OTHER PEOPLE? WHAT
ARE THE CULTURAL DIFFERENCES THAT YOU’VE SEEN AND HOW HAVE THEY BEEN OVERCOME? 

Lynda Strutton: I’ve been involved in coaching, mentoring, and development plans
for others, and there are many noticeable differences between Europe versus the
Middle East and Africa. While we still have work to do in Europe to ensure full
diversity and inclusion in the payments space, the MEA region is even further
behind.   

Firstly, there was (as in many businesses) a major imbalance of women versus
men. So, I initiated female support networking groups focusing on empowering
women with success stories and practical skills, and other sessions to support
women dealing with discrimination or harassment in their roles.   

Lately, I’ve been thinking about how to better support men whose partners are
working, emphasising the need for flexibility to balance family life. I think
this is something that we often forget about. We have certain expectations of
men, but they should be able to have the same flexibility to enable them to have
a family life and support their working partner.   





RBI: HOW DO YOU FIT IN NETWORKING?

Lynda Strutton: Networking is not something that comes naturally to me, but it’s
essential in the business world. I push myself to do it, and I’m selective about
which events to attend. With limited spare time, I ensure that networking adds
value to my professional journey.





RBI: HOW DO YOU PRIORITISE YOUR MENTAL HEALTH?  

Lynda Strutton: Balancing mental health with a busy life is about finding
equilibrium. I prioritise time with my children, partner, and work. Exercise and
“me time” are important, but I avoid stressing if I can’t stick to a rigid plan.
It’s about adapting and being flexible while ensuring all aspects of life
receive attention.  

Lynda’s career and insights serve as an inspiration for women in or entering the
fintech sector. Her journey highlights the importance of work-life balance,
supporting diversity, and finding an approach that works for you. Her
experiences provide valuable guidance for both women and men looking to thrive
in their careers while maintaining a fulfilling personal life.  









11/17/2023 13:53:44

Interview


BIOMETRICS: ‘CREATING A DECENTRALISED DIGITAL IDENTITY’ 


JOE PALMER, CHIEF PRODUCT AND INNOVATION OFFICER AT IPROOV DISCUSSES WITH ROBERT
PRENDERGAST THE POTENTIAL FOR BANKS TO TAP INTO NEXT GEN BIOMETRICS.



Credit: Shutterstock





How can banks utilise technologies with verifiable credentials and how do
biometrics assist the transition towards creating a decentralised digital
identity?


When they first began to be implemented, some biometrics could be compared to
science fiction. Now facial recognition is something that is to be expected with
each new major phone. Mercedes has even moved into the biometrics game by
implementing payment via a fingerprint scan. Biometrics is now a key part of the
banking industry and only looks to grow in importance. 

iProov is a big player in the biometrics game, providing services to the
government and banking sector. Joe Palmer, Chief Product and Innovation Officer
discusses with RBI how biometrics are impacting the banking industry. 





RBI: WHAT TYPE OF BIOMETRICS ARE SEEING THE BIGGEST RISE IN IMPLEMENTATION
RECENTLY? 

Joe Palmer: “Remote cloud-based biometrics are the most rapidly being
implemented at the moment. Face ID has been growing in usage. But they don’t
actually verify your identity. They verify that you are the same face as you
were when you took the photo and that you know the pin. If you know the pin, you
can reset your face ID and or enroll another face. Whilst they are using
biometrics, they are not an AI, they do not identify you as an individual. With
the rise of remote account creation, within financial services, governments and
large enterprises, the need to link the physical human to the government-issued
identity is becoming more and more important. Therefore, the only way it’s
possible to do that is with cloud biometrics, where you can match the image, you
can match the person who supplies their biological data with an image from a
government-issued document.”





RBI: WHAT IS IPROOV DOING SPECIFICALLY IN THE BANKING INDUSTRY RIGHT NOW? 

Joe Palmer: “Banking is our second biggest sector, behind government. We have a
range of banks across Europe, Southern Asia and the US as well. They typically
use us for onboarding. So combined with document capture, whether that’s taking
a picture of your driver’s license, ID card or passport, like at an E-gate, you
put your passport in your gate and read the data off from your passport. You can
do that with your phone using the NFC chip. The identity information is
cryptographically verifiable. It’s a legitimate identity. The image from your
passport, you get the original digital version of that. We are combined
typically with a document, like a passport or a driver’s license. 

“We’re matched against the image extracted from that document. There may be some
credit checks or AML-type checks that other partners of ours perform or the bank
may orchestrate themselves. Then that creates an account within the banking
system. Some of our banks then go on to continue to use iProov for ongoing
authentication. Whether that’s just for any time you want to interact with the
bank, set up a new payee, send a large amount of money, recover your account, or
move your banking app to another phone. These are all points of attack for
fraudsters. So, we are used in Step Up authentication in these.” 





RBI: IS AI-RELATED FRAUD A CONCERN? 

Joe Palmer: “It’s a big challenge. It’s something that we’ve been predicting for
years, we’ve been talking about the threat of deep fakes for about five years
now. I think the market has suddenly realised now we have the generative AI and
you see people doing things they’ve never done. It’s indistinguishable from the
human eye. That is a whole new category of attack. 

“The methods for detecting liveness require the user to react to a challenge.
They can be: moving your head, looking forward, speaking some numbers or
letters, raising your eyebrows etc. These are all methods active methods of
liveness detection. But the generative AI is so good now that a normal person
can’t tell the difference when a victim’s face is swapped onto an attacker’s
face. But our systems can. We illuminate the face with the screen so we can see
how the skin reflects light. That allows us to detect when these kinds of
attacks are being formed. This allows us to continually improve our system and
detect these attacks as they evolve. We have a whole system for looking at the
types of threats and monitoring for attacks and making sure that we always stay
ahead of the attackers with these innovative new techniques.” 





RBI: WHAT WILL BE THE BIG DEVELOPMENTS IN BIOMETRICS IN THE NEXT 12 MONTHS? 

Joe Palmer: “There is an emerging trend of technologies that I believe are going
to start to take hold. At the moment, many banks now offer remote digital
onboarding. You can download an app, you can go through a process, you’re
scanning a document, scan your face, enter your details, you have to scan a
letter to prove your address, etc. An account opens instantly, or it’s reviewed
and opened in 24 hours. But the next time you go and do this, you have to do the
whole process again. 

“There are new technologies with verifiable credentials. For example, they allow
users to go through a process of creating a decentralised digital identity. This
is where you verify yourself with your biometrics and your documents. Then when
a bank wants to verify you are who you claim to be, you can share this digital
identity without having to go through the whole identity verification process
again. 

“A user can start taking control of their identity. They can use it more
frequently. I think we’ll start to see the adoption of this in the next 12
months, probably two or three years before it becomes mainstream. But I think
you’ll start to see the emergence of apps that can well the acceptance of these
sorts of apps across financial institutions and other organisations.” 








11/17/2023 13:53:44
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 * Briefing
   News in Numbers
   Latest News
   Latest Deals
   Trends & Insight
 * In Depth
   RBCx is on a mission to fuel Canada’s tech innovation economy
   Shuffling deckchairs on the Titanic: is ESG a redundant concept?
   “Working for a company that values work-life balance is crucial”
   Biometrics: ‘Creating a decentralised digital identity’
   IoT reaching maturity as a theme in financial services
   Retail banking experts share sector forecasts for 2024
   How can banks hit the bullseye?
   Web3 and the future of customer loyalty
   COP27: Have we committed to our goals?

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 * Home | RBCx is on a mission to fuel Canada’s tech innovation economy
 * Editor's letter
 * Contents
 * Briefing
 * News in Numbers
 * Latest News
 * Latest Deals
 * Trends & Insight
 * In Depth
 * RBCx is on a mission to fuel Canada’s tech innovation economy
 * Shuffling deckchairs on the Titanic: is ESG a redundant concept?
 * “Working for a company that values work-life balance is crucial”
 * Biometrics: ‘Creating a decentralised digital identity’
 * IoT reaching maturity as a theme in financial services
 * Retail banking experts share sector forecasts for 2024
 * How can banks hit the bullseye?
 * Web3 and the future of customer loyalty
 * COP27: Have we committed to our goals?
 * Events
 * Next issue


 * Home | RBCx is on a mission to fuel Canada’s tech innovation economy
 * Editor's letter
 * Contents
 * Briefing
 * News in Numbers
 * Latest News
 * Latest Deals
 * Trends & Insight
 * In Depth
 * RBCx is on a mission to fuel Canada’s tech innovation economy
 * Shuffling deckchairs on the Titanic: is ESG a redundant concept?
 * “Working for a company that values work-life balance is crucial”
 * Biometrics: ‘Creating a decentralised digital identity’
 * IoT reaching maturity as a theme in financial services
 * Retail banking experts share sector forecasts for 2024
 * How can banks hit the bullseye?
 * Web3 and the future of customer loyalty
 * COP27: Have we committed to our goals?
 * Events
 * Next issue

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