Collecting and analysing data has been identified as a central challenge for institutional investors, according to a new study by Northern Trust.
The study ‘ESG’s Imprint on Institutional Investing’ found 89% of asset managers and 79% of asset owners across EMEA and Americas identified “collecting and analysing data” as a top challenge in incorporating ESG into their investment process.
The study also found “improving transparency and reporting on ESG” was one of the greatest challenges for 83% of asset managers and 85% of asset owners.
Furthermore, asset managers and owners identified “securing and normalising sustainable data” as a significant challenge, 82% and 77%, respectively.
Paul Fahey, head of investment data science (IDS) at Northern Trust, said: “Digital innovation is transforming the investment landscape, and advances in data science can be a key development in helping asset owners and managers make sense of increasing volumes of data across the ESG spectrum.”
As regulatory compliance is a crucial aspect of implementing ESG principles, asset managers (83%) and asset owners (67%) cited “staying compliant with ESG regulations” as one of their top challenges. Ninety-Five per cent of asset managers said they understood all or most of the relevant regulations.
Interestingly, the study noted a varying approach towards ESG in different regions. For example, 67% of EMEA respondents viewed ESG “holistically”, while 40% of respondents from the US shared the same thoughts.
Fifty-five per cent of the US managers focused on only one of the three factors of ESG, “there is no one-size-fits-all global solution”.
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