A recent survey by Bloomberg of about 200 European financial market participants shows a growing worry: handling the ever-growing volume of ESG data. The survey, carried out throughout 2023 and involving respondents from major European cities such as London, Stockholm, Geneva, and Milan, explored different aspects of ESG data prioritization, difficulties, and current management practices.
Meeting regulatory requirements is the top priority, but there are lingering issues with data
The survey discovered that meeting regulatory requirements is the main reason (35%) for accessing ESG data, closely followed by fulfilling climate risk and net-zero goals (18%). However, respondents also have significant concerns about the quality and coverage of company-reported ESG data, with 63% considering it as their biggest worry. This is especially important as the Corporate Sustainability Reporting Directive (CSRD) is set to significantly increase the quantity and quality of reported data from companies in the EU. Although the increased availability is positive, it also requires seamless data integration and management to avoid obstructing investment decisions.
Handling the Data Flood: Problems and Approaches
According to the survey, the biggest challenge in managing ESG data is keeping up with its constant changes and influx of new information (41%). Integrating this data with existing entity and instrument data is the next major obstacle (25%), followed by meeting reporting requirements (18%) and managing feeds from multiple ESG vendors (16%). Interestingly, while data coverage gaps create challenges, bringing in new data sets can be very resource-intensive, with companies usually only having the capacity for this process once or twice a year.
RELATED ARTICLE: Bloomberg Partners with Ørsted in 15-Year Deal to Boost Renewable Energy Production
Centralized Management Takes the Lead, with Diverse Approaches Emerging
In response to these challenges, companies are actively exploring different data management strategies. About a third (38%) choose centralized management using their own solutions, while another third (32%) assign it to individual business units. Additionally, 10% outsource their data management to third-party vendors, and 20% are still developing their strategy.
“While data quality and comparability remain global hurdles, data management is becoming a particularly sharp focus for European firms,” said Nadia Humphreys, Head of Sustainable Finance Data Solutions at Bloomberg. “For companies to effectively use ESG data in their decision-making, efficient data organization is essential. Bloomberg addresses this need by providing our sustainability data in a well-structured format, linked to our industry-leading corporate structure, security master, and other foundational data for ease of use. Furthermore, Bloomberg’s Data License Plus (DL+) ESG Manager is a fully managed service that streamlines ESG data workflows and connects them to the full power of our extensive datasets and offerings from partner vendors, empowering clients to unlock maximum value from their data effortlessly.”
Further Investigation and Materials:
- Get the complete survey findings here.
