How new reporting requirements are changing ESG data management

March 5, 2024

Investors across Europe are currently facing significant challenges in managing ESG data, as highlighted by a recent survey from Bloomberg.

According to ESG Today, the European ESG Data Trends Survey 2024, which gathered insights from over 200 financial market participants in major European cities such as London, Stockholm, Geneva, Amsterdam, Frankfurt, Paris, and Milan, underscores the critical issues surrounding the coverage, quality, and volume of ESG data.

A substantial majority of respondents, 63%, pinpointed the coverage and quality of reported ESG data as their principal concern. This challenge is compounded by the need to integrate ESG metrics with alternative data sources, a hurdle for 13% of those surveyed. The issue of data quality is particularly pressing, given the expectations that the Corporate Sustainable Reporting Directive (CSRD) will increase the volume and complexity of ESG data that firms must manage.

The survey reveals that the industry is at a crossroads in terms of ESG data management strategies. While 41% of firms have adopted a centralised approach using proprietary solutions to manage ESG data, a significant portion, 32%, still rely on a decentralised model, where data is handled individually by business units. Furthermore, 20% of respondents are in the early stages of developing a coherent ESG data management strategy.

Nadia Humphreys, Bloomberg’s Head of Sustainable Finance Data Solutions, highlighted the importance of effective data management in the context of ESG reporting. “While quality and comparability remain a global challenge, data management is coming into sharp focus for firms in Europe. If firms cannot organize their ESG data, they cannot effectively make decisions using that information.” This statement reflects the growing recognition within the financial sector of the need to address ESG data challenges proactively.

The findings of the Bloomberg survey underscore the urgent need for financial market participants to enhance their ESG data management practices. As regulatory requirements like the CSRD come into effect, firms will need to navigate the increasing complexity of ESG reporting. The focus on improving data quality and integration capabilities will be crucial for investors seeking to leverage ESG information for sustainable finance decision-making.