Seminars

Many discussions of sustainable finance focus on improving disclosure and expanding ESG and climate data. Yet experience across the financial system suggests that the central drivers for decarbonization may lie elsewhere: even when companies report extensively and commit to science-based targets, the economics of transition investments often fail to generate the returns required to attract large-scale capital. This raises an important question: how do the measurement frameworks, reporting systems, and incentive structures embedded in financial markets shape the ability of investors and companies to pursue low-carbon transition strategies? Specifically, how are we to understand the Carbon Measures proposal, backed by ExxonMobil and several large industrial and financial firms, which is to create a new global carbon accounting framework that measures emissions primarily at the product level rather than across corporate value chains (i.e., Scopes 2 and 3). According to its critics, this approach would reduce pressure on producers—particularly fossil fuel companies—to address downstream emissions, fragment global reporting standards, and potentially weaken existing climate accountability frameworks.

Both firms operate within a rapidly evolving ecosystem of AI-enabled tools, including large-scale text analysis, automated classification, and advanced modeling systems. The session will examine how emerging technologies are reshaping the boundaries of what can be measured, validated, and ultimately trusted in sustainable finance, with particular focus on the role of AI.

Current practices and academic theories assume that governments act in the best interest of society and implement the necessary policies to effectively address issues arising from externalities. Yet, governments have clearly failed to do so. This raises the question of what the private sector—both the financial sector and the real economy—can reasonably do to account for externalities and integrate them into their decision-making while fully complying with their fiduciary duties.

As most of you know, the debate over shareholder primacy – which was intensively advanced in the late 20th in both theory and practice as the essence of corporate purpose – has been faced with broader and deeper challenges. At the turn of our recent century, more and more people were urging greater recognition of the necessity of many forms of capital – not just financial but also human, intellectual, natural and others – as key to long-term value creation for both the corporation and society. At the same time, voices around the world were calling for a greater role on governance of the stakeholder groups associated with those capitals. With the creation of the International Integrated Reporting Commission in 2019 and declarations by groups like the Business Roundtable in 2019 that “each of our stakeholders is essential [and] … we commit to deliver value to all of them, for the future success of our companies, our communities and our country” it seemed a decade ago that a fundamental shift was about to take place. Then the momentum slowed and now we are facing a backlash that may be only temporary … or permanent.