“Inaction is not an option” when it comes to engaging with sustainability, a panellist at this year’s World Forum of Central Securities Depositories (WFC) affirmed.
The comment was made on a panel entitled ‘Next steps on the CSD engagement in sustainability’. The speaker stressed the fact that the sustainable transition needs to be viewed as an opportunity rather than just an obligation.
Another panellist added that ESG compliance creates opportunities, attracts investors and builds relationships — “by doing nothing, you create a negative effect.”
They suggested that CSDs could play a key role in this space, providing clarity around what market infrastructures need to be doing. One speaker suggested that this could include a consensus standardisation of what data needs to be displayed. Information must be built into structures and operations, they added, with data flowing across the network from start to end.
When polled, most audience members agreed that CSDs have a role to play in the sustainable transition, with the majority stating that all elements of ESG were relevant to CSDs. Breaking it down to individual points, governance was seen as the most important, followed by environmental and social issues.
Panellists all expressed support for industry collaboration around ESG issues. While one speaker argued, CSDs need to “lead by example” as a market infrastructure, another stressed the importance of “learning from those that are ahead of us.” Being part of a larger group allows for ESG to be better embedded in operations, they added, and will help to establish best practices and common standards across markets.
Speakers also agreed on the importance of embedding ESG practices into daily work, seeking to meet targets in everyday practice. One advocated for a “top-down” approach when it comes to ESG, with strong corporate governance put in place. This governance must be established not only within the company but for the companies that it is servicing, they added.
When questioned on their predictions for CSDs’ relationships with ESG over the next decade, one panellist reaffirmed the need for collaboration. CSDs need to “keep moving the needle”, they added, engaging more with the financial ecosystem and acting as data providers.
Another speaker agreed, stating that data is “one of the most important things that CSDs can add” when it comes to ESG. They went on to say that it is important to embrace new technology when addressing ESG issues.
One panellist stated that there needs to be a focused agenda, and progress needs to be “very well tracked”. They predicted that ESG will be fully embedded into all practices within this timeframe, something echoed by speakers throughout the panel, and advised that the community support element of ESG needs to be given more attention.
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