Firms Invest in ESG Data, But Face Hurdles
Asset managers and other financial firms are increasing their spending on ESG data collection, according to a recent Bloomberg survey.
The survey found that 92% of financial professionals plan to increase their ESG data collection spending by at least 10% this year, and 18% plan to increase their investments by 50% or more.
The survey also found that firms are having difficulty obtaining usable ESG data due to the fragmentation among data collection agencies. Nearly 30% of respondents said they felt their firms were somewhat behind the curve in managing ESG data, while more than 60% said they were ahead of the competition.
"ESG data has quickly become integral to the value financial firms deliver to their clients,” said Leila Sadiq, global head of enterprise data content at Bloomberg. “Firms are grappling with the challenge of integrating large volumes of ESG data from multiple sources, and the lack of consistency between vendors can lead to data quality issues and operational disruptions.”
The survey found that the most challenging aspects of ESG data management are handling constantly evolving and new ESG data content and managing multiple ESG vendor data feeds. Fifty-five per cent of respondents said obtaining and managing ESG data that is constantly evolving is a major challenge for them. Nearly half also said managing multiple ESG vendor data feeds is a problem.
“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,” said Gert Raeves, research director and founder of Adox Research. “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.”
The survey results suggest that ESG data is becoming increasingly important to financial firms. However, firms are still facing challenges in obtaining and managing this data. As ESG data becomes more mainstream, firms will need to develop better ways to collect, manage, and use this data to make informed investment decisions.
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Source: Financial Advisor
