ESG Business Challenges
We are specialists in operations and technology, with a profound understanding of the implications of ESG. We help investors to make wise, well informed investment decisions by enabling them to identify firms whose ESG practices align with their own, and the best data sources on which to base their choice. We also support firms themselves to align with ESG best practice.
We have extensive experience in delivering assignments that range from research into carbon foot printing and the implications of SFDR to the future of client reporting. Our expertise is complemented by our in-house database of over 60 ESG data vendors and their respective strengths and weaknesses, which enables us to streamline selection processes and offer meaningful evaluations of firms’ capabilities.
To find out more, please contact us or reach out to any of our specialists below.
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- ESG integration requires operational changes across the entire business from front office integration into decision-making through to end client reporting, putting additional strain on firms’ operations.
- There is a lack of standardisation when it comes to reporting requirements from sustainable investment initiatives, bespoke client requests and upcoming regulation, all of which reduce the efficiency of a firm’s operations.
- Data model complexity is on the rise driven by the increase in data required to provide the niche datasets that ESG demands, including challenges taking in multiple data feeds from external providers.
- Selecting and implementing the most appropriate data providers with appropriate coverage and high quality, decision useful data that can be easily digested by clients.
- Challenges linking data provided at different levels of the corporate hierarchy (e.g. parent company and instrument) and mapping it to the relevant security identifier are inhibiting usefulness.
- A number of ESG regulations are inbound diverging by geography and lacking clarity as to how to implement.
- One size fits all regulatory approach is difficult to apply to unique investment firms.
| ESG operation model integration | Integration of ESG into the investment decision process goes beyond updating policies and procedures. The increased complexity and operational burden must be accounted for and optimised within the operating model. Sionic has deep experience working with clients to design/redesign and enhance operating models. |
| ESG data strategy | Data requirements are on the rise, driving an increased reliance on multiple data providers to source ESG datasets, adding complexity to the data model. Firms need to ensure this is well-managed to ensure they are effectively leveraging and deploying the data they pay for. Snowflake is proving a valuable tool within ESG data strategy, driving cost savings and reducing both data model and operational complexity. Sionic has devised and delivered many data strategies on behalf of clients and works collaboratively with Snowflake. |
| ESG data vendor selection and evaluation | The unregulated, unaudited ESG data vendor landscape can be difficult to navigate. Appropriate selection and ongoing management of vendors will prove crucial to maintaining an informational advantage as well as standing up to potential future regulatory scrutiny around vendor oversight. Sionic is well versed in running ESG selection and evaluation processes on behalf of clients – leveraging our strong vendor relations. |
| Technology vendor selection and implementation | The heightened operational requirements can mean outsourcing ESG data aggregation, analytics and/or end client reporting can prove a cost effective model for many clients. Sionic keeps abreast of the ESG technology market and is skilled in running selection process as well as their subsequent implementation. |
| Implementation of new reporting frameworks | Regulatory are not the only reporting requirements for ESG, many clients are signatories of a variety of sustainability initiatives, such as UN PRI or the UK Stewardship Code, that carry their own reporting requisites. Sionic can help assess your compliance with these and implement change where required. |
| Regulatory change | Regulatory horizon scanning to ensure compliance with the upcoming ESG regulation in the geographies of your business is paramount. ESG regulations represent a fundamental shift in how the investment industry operates, as such change projects need to be approached holistically to ensure the whole business is prepared for this shift. A gap analysis into your current state of readiness can help plug any unwanted gaps and drive strategic choices to prepare your firm ahead of implementation. Sionic has worked with a number of clients identifying their regulatory requirements and implementing change, including SDFR. |
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