Reliable Data for Sustainable Finance: Fixing the Information Supply Chain

Sustainability information (SI) plays a central role in sustainable finance, enabling investors to price sustainability-related risks, supporting sustainable investment strategies, and facilitating the enforcement of firms’ sustainability pledges. Yet SI suffers from reliability problems that undermine its ability to perform such functions effectively. This article identifies and examines four main categories of reliability failures: information gaps, due to data that are often incomplete or technically impossible to generate; fragmentation, stemming from the absence of common reporting standards that makes SI disclosures inconsistent and non-comparable across producers; the qualitative and forward-looking nature of much SI, which renders it inherently non-verifiable; and vulnerability to greenwashing, as narrative disclosure and the lack of standardization facilitate firms’ ability to inflate their sustainability performance. Against this backdrop, the article examines the main legal strategies available to address these failures, such as methodology disclosure e mandatory standardized reporting, and then assesses whether and to what extent the EU regulatory framework relating to SI – encompassing the CSRD/ESRS, SFDR, ESG Ratings Regulation, Low Carbon Benchmark Regulation, EU Green Bond Standard, and ESAP – deployed them, highlighting both the progress achieved and the challenges that remain. It concludes by identifying targeted reforms, including stronger assurance standards, enhanced ESG rating oversight, international reporting standard convergence, and public investment in data infrastructure.