The Connector. podcast - Matter

In the latest episode of the Connector Podcast, we explore sustainable finance with Niels, the co-founder and CEO of Matter, a Denmark-based fintech company. This episode offers a wealth of insights for those interested in the convergence of finance and sustainability. Niels discusses his transition from the United Nations to launching Matter, offering a unique perspective on mobilizing capital for sustainable development.

One of the key topics discussed in this episode is how Matter is revolutionizing sustainability data analytics. Unlike traditional ESG providers, Matter goes beyond assessing financial risks to understand the broader impact of companies on society and the environment. Niels explains that Matter uses a combination of company-reported data, external information, and sentiment analysis to deliver meaningful insights for institutional investors, asset managers, and pension funds.

The discussion also covers the unique approach Matter takes to ESG assessments. Historically, ESG has been viewed through the lens of financial risk to a company. This means understanding the potential financial loss an investor might incur due to a company's inability to manage its environmental, social, and governance-related risks. However, Matter flips this perspective by also considering the company's impact on the world around it. This dual approach provides a more comprehensive understanding of both financial risks and real-world impact.

Niels highlights the importance of using multiple data sources to get a full picture of a company's performance. This includes company-reported, audited data points, as well as insights from external sources and sentiment analysis of media coverage. By aggregating these diverse data points, Matter aims to provide a holistic view of a company's sustainability performance, measured against internationally recognized frameworks like the UNSDGs and the Global Compact.

The episode also touches on the challenges and opportunities in the ESG data market. Niels discusses the criticism that there are too many data providers, making it difficult for asset managers to navigate the overflow of information. He argues that the real challenge lies in making sense of this information and ensuring its accuracy and reliability. Matter addresses this by providing transparent, traceable data that allows clients to form their own perspectives.

Another significant topic is the evolving nature of sustainability assessments. Niels notes that sustainability analysis has become more automated and data-driven, a shift that has transformed what was once the least digitized part of investment management. This technological advancement has opened new opportunities for gathering and structuring information about company performance in ways that were not possible a few years ago.

Looking to the future, Niels reveals that Matter is focusing on helping clients understand the physical risks related to climate change and natural capital. They have already launched new options around temperature scores and value at risk, but physical risk is the next big area of focus. This aligns with the broader trend of using location data and satellite imagery to make sustainability assessments more precise and actionable.

The episode concludes with a discussion on the future of sustainability on a global scale. Niels acknowledges the current backlash against ESG movements but remains optimistic about the increasing availability of data and the professionalization of sustainability analysis across various asset classes. He believes that with more accurate data and better decision-making tools, the gap between ESG pledges and actual outcomes will narrow, leading to more tangible impacts.

In summary, this episode of the Connector Podcast offers a deep dive into how Matter is setting new standards in sustainability data analytics. Niels' insights provide valuable lessons for anyone interested in sustainable finance, from institutional investors to individual asset managers. By bridging the gap between financial performance and real-world impact, Matter is pioneering a new approach to ESG that could reshape the future of investing.

Tune in to this episode to learn more about how innovative data analytics are paving the way for a more sustainable future. Whether you're an asset manager, a sustainability enthusiast, or just curious about the latest trends in fintech, this episode is packed with valuable information that you won't want to miss. Listen to the full episode here.