Although high quality and comparable climate-related data and consistent metrics are essential for the financial markets to price and manage climate-related risks properly, today's reality is that the data is often a metaphorical Tower of Babel both within firms and among them.
To help combat this, in October 2021, the Climate Financial Risk Forum published the Climate Financial Risk Forum Guide 2021 - Climate Data and Metrics. The report provides an overview of the state-of-play of climate risk metrics at the time, noting the recognition of data gaps in the industry. It also provides some suggested solutions.
Climate risk data is a work in progress today. So firms need to be sure they understand the quality and use of their data at a granular level and that they are aware of any issues around the use of the data or its comparability.
Compliance should engage with other teams across the business, including data governance, risk management, IT and investor relations, to work through climate risk data issues internally. Given the overall challenges highlighted in the report, they should also be alert to potential legal risks around using and publishing data.