Featured Papers and Interviews with Industry Thought Leaders
As the volume of ESG assets under management continues to expand, ESG considerations have become further integrated into the investment process, and investment management firms have increasingly focused on the practice of active engagement. However, one of the predominant issues that investment managers struggle with when integrating external ESG data into their investment processes is the nature of the data itself, particularly its lack of standardisation.
The construction of ESG portfolios requires reliable and accurate data on individual securities. Also, standardized ESG data is necessary in order to verify that a portfolio (and the investment manager, in aggregate) is successfully achieving, or even exceeding, its targeted ESG-related objectives.
However, the majority of this data originates from the corporations themselves, then passes through the conduit of an ESG data provider. So the process itself remains exposed to a myriad of additional issues, including non-standardised approaches to corporate ESG integration, the timeliness and validity of the data that is generated, and even corporate greenwashing.
The provision of reliably accurate, timely, and standardised ESG data is a tremendous effort, but the closer all stakeholders in this process can get to adopting a standardised approach, the greater (and more measurable) the benefits will be for corporations, for ESG data providers, and for the investment industry as a whole.
Click to read: ESG Data: Overcoming the challenges (Special Report, 2021)
This Special Report investigates the many issues surrounding the provision of ESG data, suggesting several potential solutions to the specific ESG data challenges faced by investors.