ROME (Reuters) -"Bold and urgent" international coordination is needed to make data companies provide on environmental, social and governance (ESG) indicators more robust and prevent greenwashing, the head of Italy's central bank said on Thursday.
A lack of regulation to strengthen ESG indicators has prompted concerns among investors and environmentalists that companies might get better ESG ratings than they deserve because of data that makes them appear more sustainable than they really are.
"The fact that there is no obligation to oversee firms' non-financial communications, the absence of standardised indicators... leave room for firms to attempt to alter the external perception of their sustainability in order to attract funds," Ignazio Visco said at a conference.
Visco said "bold and urgent" coordination was needed at the international level to deliver better data to measure the impact of climate change on the economy and the financial system.
The volume of money flowing into funds on the basis of companies' ESG scores has risen sharply, but regulators worry about the lack of reliability and comparability of the data.
"Sustainable finance has grown remarkably in just a few years, to the point that one could wonder whether this growth is itself sustainable," Visco added.
(Reporting by Stefano Bernabei, writing by Giulia Segreti, editing by Barbara Lewis)