Over the past ten years, the nature of what makes a good investment has started to shift. Today, a significant and growing proportion of investors are interested in more than whether their investments will make a good return; they want to know whether they will add value to the wider world through Environmental, Social or Governance (ESG) benefits.
Already, ESG investments make up a significant part of the total market. Last year, it is thought that the ESG market grew by a whopping 37%, as asset managers and pension funds looked to refocus their products around millennials – the demographic most likely to be interested in ESG measures (millennials make up 77% of the interest in and ownership of ESG assets). According to the Global Sustainable Investment Alliance, the ESG market now comprises almost $23 trillion worth of assets under management worldwide.
While ESG investing started out to meet demand for ethical and sustainable business, there’s growing evidence that companies which are strong in such measures are also strong performers overall. Indeed, analysis shows that ESG-focused investments can record returns that are equal to or better than funds built only on traditional risk-weighted measures. As the field of ESG investing matures, it is therefore becoming apparent that the measures not only help the planet, they also deliver sound returns.
At RIMES, we are seeing a growing number of clients express an interest in ESG measures. As we work to help such clients integrate ESG indices into their operations, it’s become clear that, as with all benchmarks, success in ESG will come down to good data. First, firms need to ensure they have access to the best research and ratings on the market – a task that can be challenging given the relative immaturity of the market. Second, firms need to be able to tailor these feeds to fit their needs of their destination systems and business processes. If not handled correctly, this area of data management can slow down operations and rapidly accrue high costs.
To overcome these challenges and help ensure that they can leverage the opportunities of ESG measures rapidly and cost effectively, you should consider partnering with managed data service providers such as RIMES. By doing so, you would gain immediate access to the ESG indices your need provided in fully customized feeds. With the time-consuming data quality assessment taken core of by the managed service provider, this is a seamless approach to data management that provides you with the shortest route to value.
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