By Maria Wowro, Climate & Ecosystem Services Programme Manager, the Forest Stewardship Council (FSC) International
Financial institutions increasingly recognize that climate and nature‑related risks can directly influence the performance and stability of the businesses they invest in. To safeguard portfolios and justify investment decisions, they need credible, verifiable data proving that these assets are resilient to environmental change. Yet while sustainability reporting has grown rapidly, confidence in the data still lags.
A 2024 EY survey revealed that, despite the rise in sustainability reporting, 66% of investors indicated that their institutions are likely to reduce their consideration of ESG in decision-making. The most common reason cited for this shift is uncertainty about the reliability of the underlying data, with many financial institutions instead focusing on managing short-term market pressures.
Schroders’ 2025 report found that 94% of investors are concerned about concentration risk, partly because they can’t be sure which sustainability claims are genuine. When companies overstate their green credentials, investors risk overexposure to assets that are not truly sustainable. Similarly, portfolios that appear diversified on paper may still be concentrated in high-risk ESG areas, such as carbon-intensive supply chains or water-stressed regions.
These findings suggest that in sustainable finance, trust in data now matters more than the volume of disclosure. Without credibility, even the best-intentioned sustainability goals will struggle to translate into real investment impact.
The data credibility gap and why it matters
As investors look to protect their portfolios from environmental risks, transparent, verifiable environmental data is becoming essential for financial resilience. Institutions that back their sustainability strategies with credible, science-based evidence can better maintain investor confidence and manage exposure to both ecological and reputational risks.
The economic stakes are enormous. Roughly half of global GDP, around US $58 trillion, is moderately or highly dependent on natural systems. The loss of these systems could cost the global economy US $2.7 trillion a year by 2030, with the most severe impacts falling on the world’s most vulnerable economies. Yet the finance dedicated to protecting nature still falls far short of what is required.
With disclosure rules tightening and climate exposure becoming measurable, credible environmental data is no longer about brand image, it has become a financial necessity. Forest and ecosystem data now guide investors in assessing real risk and value. For financial institutions navigating a volatile world shaped by climate change and biodiversity loss, trust will increasingly depend on what can be proven.
Independent verification frameworks, such as FSC’s Verified Impact, show how trusted measurement can turn sustainability performance into investor confidence. It offers the market credible, scientifically grounded evidence that environmental impacts claimed by companies are real, measurable, and aligned with global standards. Impacts can be verified in biodiversity conservation, carbon storage, water purification, soil regeneration, and recreation.
From promises to nature-positive returns
Investor attitudes toward sustainabilityare evolving beyond mere promises of action toward demonstrable, measurable outcomes. While 93% of investors remain confident that companies will achieve their sustainability targets, 85% believe greenwashing is becoming a more serious problem. This tension highlights the growing demand for transparent, verifiable proof.
Credibility in sustainability reporting is not just about producing data, it’s about showing real outcomes backed by independent verification. In forest supply chains, systems like FSC certification give investors and businesses verified evidence of how operations protect ecosystems and manage environmental risks. Businesses must also show how environmental changes could affect their financial resilience over time, and how their operations impact the environment. Transparent reporting and proactive management of environmental impacts show that a company is forward-looking, better able to identify risks, protect value, and build long-term stability.
When investors rely on robust verification frameworks, they can channel capital toward nature-based projects and businesses that deliver genuine impact and financial returns. This connection between verified, positive outcomes for nature and reduced portfolio risk is helping to define the future of sustainable finance.
Building high-integrity sustainable finance
Financial institutions want data they can trust that shows which businesses are genuinely reducing risk as markets continue to be affected by climate change.
Verified data helps build this trust, and science-based verification allows investors to see which companies are managing climate risks effectively and which are falling behind. Independent verification frameworks bridge the gap between on-the-ground environmental outcomes and financial reporting, providing decision-makers with measurable evidence to base their investments.
To stay competitive, companies need to invest in reliable environmental data that proves their sustainability efforts and shows how they’re reducing long-term risks. Verified environmental impact is becoming a marker of operational stability, helping financial institutions protect asset value and build resilience against climate disruptions.
About FSC: FSC is a non-profit membership organization that provides a certification tool to enable sustainable management of forests. Currently, over 161 million hectares of forests worldwide are certified to FSC standards. It is widely regarded as the most rigorous forest certification system among NGOs, consumers, and businesses alike to maintain healthy and resilient forests. FSC’s responsible forestry standard is a proven solution to tackle today’s deforestation, climate, and biodiversity challenges. The standard is based on ten core principles and is linked to strict chain of custody and forest management certifications.
Found on millions of forest-based products around the world, FSC’s “check tree” label verifies sustainable sourcing from forest to consumer. Choosing FSC helps to preserve forests, wildlife and clean water and supports the Indigenous Peoples, forest workers and communities who depend on them.
