Institutional investors spend an average of $1.3m annually related to ESG data

Institutional investors are spending an average of $1.3m annually to collect, analyse and report climate data to inform their investment decisions, according to a study from ERM.

The report also found that on average corporate issuers spend $533,000 annually on climate-related disclosures.

There were three main areas for spend in climate-related disclosure activities. The largest was greenhouse gas analysis and disclosures, with an average annual cost of $2237,000. The second biggest was climate scenario analysis and disclosure with an annual average spend of $154,000, and the third was internal climate risk management controls, particularly those related to integrating climate risk into business processes, with an average cost of $148,000.

Investor respondents had a slightly different top three. The biggest costs for them were related to external ESG ratings, data providers and consultants, with an average annual cost of $487,000.

Second was in-house, outside counsel and proxy solicitor analysis of shareholder voting ballot items related to gathering climate risk management information. The average annual cost of this was $405,000. The third biggest spend was internal climate-related investment analysis, with an annual cost of $357,000.

Earlier this week, the US Securities and Exchange Commission (SEC) has proposed changes to rules and reporting around environmental, social, and governance (ESG) investment practices.

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