Given the huge importance of Environmental, Social and Governance (ESG) investing, it’s easy to forget just how nascent the market really is. Even when it comes to the most basic elements of defining what “green” looks like, or what constitutes a social good, there’s still much work to be done.
As reported in the FT, finding accurate data on the ESG records of businesses remains a challenge for investors. So, while demand for green investments in undeniably growing, investment managers and asset owners alike are struggling to achieve the visibility they need to direct cash into truly sustainable assets. The article cites a 2020 survey by BlackRock, which found that low quality or unavailable ESG data and analytics is the biggest obstacle to green investing.
There is no doubt that as the market matures, new standards will emerge to help bring clarity. For instance, the EU is currently working on a taxonomy for sustainable activities to bring some robust definitions to the area. However, it will take time for this and other work around ESG standards to bear fruit. In the meantime, investment managers will want to find a way into this market in order to meet client mandates and to gain a foothold in what will be an incredibly important area of investing in the future.
Andrew Barnett, Global Head of Product Strategy at RIMES, commented: “The data required to weigh ESG risks and spot investment opportunities is out there, but for most firms the work involved in sourcing, validating and mapping this data is an unwelcome burden. In particular, ESG analysis is severely hampered by a lack of mapping or cross-referencing across data sets, which limits the ability of firms to compare data sets and generate insights.
“However, by working with strategic partners like RIMES, firms can outsource these activities to data experts. Making use of our direct relationships with data issuers, our economies of scale, and our unrivalled expertise in operational data management, firms can gain quick access to the data they need for effective ESG decision making.
“Having the right level of data visibility and enrichment for ESG is very difficult for firms to achieve on their own. That’s why it makes sense to leave it to partners who work on this very task day-in, day-out.”
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