Surge in ESG investment amid management challenges

Over 90% of executives are planning to increase their expenditure in ESG, according to a new report.

The ‘ESG Data Acquisition & Management Survey 2023‘, conducted by Bloomberg and Adox, revealed that 92% of executives intend to augment their ESG (environmental, social and governance) expenditure by at least 10%.

Additionally, 18% are aiming for an increment of 50% or more. Firms are predominantly channelling this investment towards ESG benchmarks and indices (29%), company-specific data (23%), ESG scores (20%) and sustainable debt (19%).

Data quality stands out as the primary determinant when choosing an ESG data supplier, followed closely by the breadth of coverage.

Additionally, the report highlighted the division in firms’ self-assessment of their ESG proficiencies. While 64% perceive themselves as industry front-runners, about 30% believe they trail behind.

Leila Sadiq, global head of enterprise data content at Bloomberg, commented: “Once categorised as an alternative data source, ESG data has quickly become integral to the value financial firms deliver to their clients. Executives are making significant strategic investments in ESG data acquisition and management to differentiate themselves and meet client and regulatory demand.”

Yet, challenges in data management persist. Over 70% of firms adopt an inconsistent or decentralised method for ESG data sourcing and management. Only 29% of respondents utilise a comprehensive, firm-wide strategy.

The main impediments identified include adapting to the continuously evolving ESG data content (55%), juggling various vendor data feeds (50%) and synchronising ESG content with current entity data (48%). In terms of technical delivery, cloud solutions are the go-to for 85% of the participants.

Gert Raeves, research director and founder of Adox Research, said, “While firms are planning for ESG data to become a part of mainstream data and research workflows, they realise that the age of ESG data behaving the same as other financial data sets has not yet arrived.

“In the meantime, they are prioritising technical scalability and data transparency to make sure analysts, investors and regulators have the right tools to select, curate and enrich existing datasets with key ESG attributes.” 

© 2023 funds europe

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