PMs eye higher ESG allocations but unsure on data management

Financial firm executives are planning to increase ESG data spending

PMs eye higher ESG allocations but unsure on data management
Steve Randall

The financial services industry can benefit from accurate and updated data on ESG, but a new report reveals many portfolio managers and executives are unsure how to best manage it.

Bloomberg and Adox Research polled 100 PMs, climate risk executives, and data management executives, about their priorities for ESG data spend as well as approaches to ESG data acquisition and management.

Spending is set to increase for nearly all executives (92%) - 18% are planning to boost it by 50% or more - with ESG benchmarks and indices (29%), company-reported data (23%), ESG scores (20%), and sustainable debt (19%) marked out as the priorities.

Date quality and breadth are the two most important factors cited by respondents when deciding on an ESG data provider.

"Once categorized as an alternative data source, 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. “Executives are making significant strategic investments in ESG data acquisition and management to differentiate themselves and meet client and regulatory demand.”

Two thirds of respondents believe they are ahead of the competition with their ESG capabilities but 30% admit to lagging. However, almost all said that ESG data is important for keeping pace with their peers (45%), achieving a competitive advantage (44%), and for regulatory compliance (10%).

Data management

Over 70% of firms report taking an ad hoc or decentralized approach to acquiring and managing their ESG data while only 29% take a holistic firmwide approach for evaluating, implementing, and rationalizing their ESG data.

The most challenging aspects are:

  • handling constantly evolving and new ESG data content (55%)
  • managing multiple ESG vendor data feeds (50%)
  • aligning ESG content to existing entity data (48%)

"While firms are planning for ESG data to become a part of mainstream data and research workflows, they realize that the age of ESG data behaving the same as other financial data sets has not yet arrived. In the meantime, they are prioritizing 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," said Gert Raeves, Research Director and Founder of Adox Research.