[2021 Asia Financial Forum] Reasons for the Rise of ESG... Increased Demand for Eco-friendly Economic Reconstruction After COVID-19

Pierce Haven, Director of the European Banking Authority (EBA)
Importance of ESG Measurement Methods and Meaning

[Asia Economy Reporter Ki Ha-young] Pierce Haben, Director of the European Banking Authority (EBA), stated on the 25th at the Westin Chosun Hotel in Sogong-ro, Jung-gu, Seoul, during the '2021 Seoul Asia Financial Forum' that the reason ESG (Environmental, Social, and Governance) is important is because "public awareness of the risks of climate change and the need to take action has increased," and "since the COVID-19 pandemic, there has been a growing demand for environmentally friendly economic reconstruction."

He added, "In terms of priority, more attention is currently focused on the environment, but all elements of ESG are important." He said, "In the case of the environment, it is being concretized because it can be measured in specific areas such as carbon related to climate change, but social and governance risks, which require qualitative evaluation, are also considered important."

Regarding the challenges faced by the EBA related to green finance, he mentioned that understanding ESG measurement methods and what the results mean is the most important. He summarized this into two aspects: 'matrix' and 'meaning.' Concerning the matrix, Director Haben said, "To understand ESG-related risks and mitigate them, data is necessary," and emphasized, "Since there is no data in the way we want regarding ESG, cooperation to obtain data from clients is needed." Regarding meaning, he stated, "It is essential to know what ESG-related indicators mean, for example, how much the green asset ratio indicates environmental friendliness," and added, "It is important to interpret how the economy changes over time and how the indicators change accordingly."

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