Managing ESG data

We consider why investment professionals are requiring more data than ever – and how to select the right sources

Sustainable investing is becoming more prolific, with over 50% of European inflows in 2020 being into ESG-related funds, according to Refinitiv Lipper.

Considering recent regulatory changes, such as SFDR and the enshrining of TCFD into UK regulation, as well as increased client demand for both bespoke and more thorough reporting, investment professionals are requiring more data than ever before.

Given the subjectivity and specialism of ESG data there has been a surge in demand for multiple sources, but how do managers go about selecting them?

Sufficient due diligence in the selection process is paramount.

  • Sionic has conducted extensive research into the ESG data provider landscape and surveyed both asset owner and asset manager ESG usage. 

ESG data subscription is trending towards multi-sourced, with the average among asset managers surveyed by Sionic subscribing to five. IT departments are fundamental in ensuring these data sources are appropriately aggregated, mapped and made available to the necessary business users.

  • Sionic has run ESG provider selections and explored options for sourcing and effective data integration.  

Integration is made more challenging by data being delivered with different security identifiers and at different levels of the corporate hierarchy. Data needs to be accurately pushed down to the lowest level of the hierarchy

Additionally, asset managers are incorporating their own in-house ESG beliefs and are reliant on their data platforms being able to aggregate this with external sources to bring together the full ESG picture.

ESG-related investment adds further complexity to the operating model and data platforms need to be robust enough to handle this.

  • Sionic has consulted on data mapping and corporate hierarchy data solutions and recently written a white paper on the challenges to the operating model.

To find out how we can help with any aspect of your ESG programme, contact us.

James Tasker and Clare Vincent-Silk

Authors James Tasker and Clare Vincent-Silk