A recent Bloomberg survey has shone a light on the significant challenges that financial market participants in Europe are encountering with environmental, social, and governance (ESG) data.
This comprehensive survey, which gathered insights from around 200 professionals across major European cities including London, Stockholm, Geneva, Amsterdam, Frankfurt, Paris, and Milan, highlights the pressing issue of ESG data management as the volume of such data escalates.
The survey revealed that the primary concern for accessing ESG data is to meet regulatory requirements, a priority for 35% of the respondents. This is closely followed by objectives related to climate risk and achieving net-zero targets, which 18% of the participants flagged as crucial. However, the path to fulfilling these priorities is obstructed by significant concerns regarding the coverage and quality of company-reported ESG data, noted by a staggering 63% of respondents. This concern is timely, given the European Union’s Corporate Sustainability Reporting Directive (CSRD) which is set to enhance the quantity and quality of ESG disclosures.
The challenge does not end with obtaining high-quality data; managing this influx of information is another hurdle. The survey identifies evolving and new data content (41%), linking ESG data to existing databases (25%), meeting reporting requirements (18%), and managing multiple vendor feeds (16%) as the primary data management challenges. These issues highlight the resource-intensive nature of ESG data onboarding and the risk it poses to timely investment decisions.
Despite these obstacles, strategies for ESG data management are varied among firms, with 38% opting for a centralized management approach using proprietary solutions, and 32% managing data individually across business units. Some firms, around 10%, have chosen to outsource this responsibility to third-party vendors, while 20% are still in the process of strategizing their approach.
Bloomberg’s Head of Sustainable Finance Data Solutions, Nadia Humphreys, underscores the importance of effective data management. “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,” Humphreys stated. Bloomberg is addressing these challenges by offering solutions like the Data License Plus (DL+) ESG Manager, which aims to simplify the process for firms, enabling them to focus on investment decisions rather than the intricacies of data management.
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