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The Data Foundation of Sustainable Finance

In: The Sustainable Finance Operating System

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  • Wolfgang Spiess-Knafl

    (Munich Business School)

Abstract

This chapter examines the data foundation that is central for the Sustainable Finance Operating System, highlighting the indispensable role of reliable information while confronting the significant challenges posed by ESG data complexity. It applies an information theory lens to understand problems like signal to noise ratios and informational entropy in ESG datasets, underscoring the implications of this noisy environment for decision-making. The chapter also explores strategies for managing this complexity through technological advancements like artificial intelligence and the availability of satellite data, alongside the push for global standardization in reporting and taxonomies. Furthermore, the chapter maps the ESG data value chain, detailing the stages from production and verification to distribution, interpretation and activation. It discusses the specific technology solutions, including data-collection tools, processing systems, advanced analytics and visualization platforms. The role of satellite data as an independent verification source and the function of semantic layers in harmonizing disparate information are explored. Finally, the chapter analyzes the ESG ratings ecosystem, covering the purpose and construction of ratings, the landscape of providers, their market influence and the persistent challenges related to rating divergence, transparency and materiality definitions.

Suggested Citation

  • Wolfgang Spiess-Knafl, 2025. "The Data Foundation of Sustainable Finance," Palgrave Studies in Impact Finance, in: The Sustainable Finance Operating System, chapter 0, pages 129-149, Palgrave Macmillan.
    • Handle: RePEc:pal:psifcp:978-3-031-97499-1_6
    DOI: 10.1007/978-3-031-97499-1_6
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