A recent Bloomberg study highlighted the significant challenges facing European financial market participants regarding environmental, social and governance (ESG) data.
Gathering insights from nearly 200 experts from major European cities including London, Stockholm, Geneva, Amsterdam, Frankfurt, Paris and Milan, this comprehensive study reveals how ESG data management is changing as the amount of ESG data grows. It highlights pressing issues.
The survey revealed that the main concern when accessing ESG data is meeting regulatory requirements, a priority for 35% of respondents. This was followed by goals related to climate risk and achieving net zero targets, with 18% of participants saying these were important. However, the path to achieving these priorities is hampered by significant concerns about the scope and quality of ESG data that companies report, as noted by a staggering 63% of respondents. Masu. This concern is timely given the European Union's Corporate Sustainability Reporting Directive (CSRD), which aims to strengthen the quantity and quality of ESG disclosures.
The challenge goes beyond just obtaining high-quality data. Managing this influx of information is another hurdle. The survey found that the main data management challenges include evolving new data content (41%), linking ESG data to existing databases (25%), meeting reporting requirements (18%), and managing multiple vendor feeds. Management (16%) has been identified. These issues highlight the resource-intensive nature of ESG data onboarding and the risks it poses to timely investment decisions.
Despite these obstacles, ESG data management strategies vary by company, with 38% choosing a centralized approach using proprietary solutions and 32% managing data separately across business units. Some companies (approximately 10%) are choosing to outsource this responsibility to third-party vendors, while 20% are still strategizing their approach.
Nadia Humphreys, head of sustainable finance data solutions at Bloomberg, emphasizes the importance of effective data management. “While quality and comparability remain a global challenge, there is a strong focus on data management for companies in Europe. If companies cannot organize their ESG data, they cannot effectively use the information to make decisions.” You can't do that,” Humphries said. Bloomberg addresses these challenges by offering solutions such as the Data License Plus (DL+) ESG Manager, which aims to simplify processes and allow companies to focus on investment decisions rather than complex data management. We are working on this.
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