That's not to discount the value of better data, but to recognize that data has uses and limitations, both when it is backwards looking and when it is forward looking and predictive. There is no perfect metric and human experience is needed to make sure data is applied towards equitable outcomes.

Risk metrics that overly weight risk in emerging markets inhibits financing flows where it is needed most, and contributes to the problems of debt structures that are too rigid to support resilient #TransitionFinance.

The transition is an ideal situation for new models to emerge because past risk experience doesn't map as well to future risk prospects, which is going to force significant changes in how financing adapts within a changing climate, especially if insurance faces its own climate reckoning.

As has been seen, Islamic banks in particular struggle to use equity-based products because of the realities of bank regulation, but there is a lot more room for different financing channels now than in decades past when the choice was bank or investment house / investment fund.

Islamic finance prioritizes a link to underlying real economic activities, and many people want it to focus more on equity-based structures. This could also provide value in a transition finance scenario because debt rigidities can lead to sharp cliff-edge 'jump to distress' pricing.

The short version is that transition finance for things like coal phase out are very complex, and also very rigidly structured at the project level. When transition depends on an uncertain future path & speed, rigidities cause problems and lengthy debt negotiations at each step slow the transition.

In doing so, there should be a priority placed on the delivery in support of ambitious goals, rather than focusing mostly on an approach to #ESG dictated by compliance and disclosure obligations. #ResponsibleFinance

www.linkedin.com/pulse/making...

For financial institutions in #OIC markets in in #IslamicFinance, will benefit from current instability affecting #sustainability by doubling down on more ambitious goals.

- breaking the hold of short-term financial returns on decision-making,

- leadership among the #GlobalSouth countries through adoption, and

- delivery on more sustainable economic models, and the use of #technology including #AI to avoid “being trapped in an acronym-heavy compliance regime”.