Over the past 20 years or so there has been a gradual shift in how we measure the value of corporations. In the past, all that mattered was financial performance; but today, given the pressures of climate change and rapid population expansion, other measures are becoming equally important to investors, particularly sustainability.
As a result of this shift, we are today seeing growing interest around the use of Environmental, Social and Governance (ESG) indices that rate the performance of companies against Corporate Social Responsibility indicators. ESG allows investment managers to integrate sustainability into their products and base investment decisions on a wider range of data around risk and opportunities.
In fact, ESGs are fast becoming a fundamental element of financial investment; and ESG ratings and indexing will play an important role in helping make business more sustainable over the long-term. However, despite its novelty, many of the things that apply to the use of financial benchmarks and indices also apply to ESGs. This is particularly true when it comes to the quality of the ESG data that investment managers use to build products and make investment decisions.
The criteria that feed into ESG scores are varied and quick to change. Elements such as a company’s carbon footprint and its policies around human rights and ethical sourcing are all considered. However, ratings agencies are continually reviewing their metrics to ensure they are up-to-date and fit-for-purpose. As a result, measurements change, and certain criteria are removed altogether when deemed no longer relevant. Investors need to stay on top of these changes to ensure their decisions are made on the most current data.
That is the fundamental challenge facing firms as they look to build up their ESG offerings. The volume of data they need to review is vast; and keeping on top of the continual changes being made to the indices can be tough for teams that are already stretched managing financial benchmark data.
The solution to this challenge is to take ESG index data as a managed service from providers such as RIMES. These cloud-based services ensure that all ESG data flowing into a firm is up to date, and that all relevant indices are included in the data feed; thereby ensuring there are no blind spots for the investment firm. Moreover, the best services provide the ESG data in a form that can be immediately ingested into in-house data management platforms; removing the need for costly and time-consuming data integration tasks.
As ESGs continue to make a mark on the investment market, the way ESG data is managed is only going to become more important. Act now to ensure your data management capability can deliver optimally.
Find out more about RIMES’s ESG Data Partners below:
■ GPR IPCM LFFS Sustainable GRES Index
■ MAC Global Solar Index
■ Cleantech Index
■ S&P 500 Fossil Free Index
■ S&P Catholic Values Index
■ FTSE4Good Indexes
■ FTSE Environmental Indexes
■ MSCI ESG Indexes
■ DJ Sustainability Indices
■ ECPI Equities
■ ECPI Bond Indices
■ Calvert Responsible Index
■ Jantzi Social Index
■ Bloomberg Barclays MSCI Green Bonds Indexes
■ Bloomberg Barclays Fixed Income ESG Indices
Contact us to find out more.
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