41% of financial market participants based in Europe see managing constantly evolving ESG data as a top challenge for their firms, according to a Bloomberg survey.
The Bloomberg survey of around 200 financial market participants from London, Stockholm, Geneva, Amsterdam, Frankfurt, Paris and Milan throughout 2023, highlighted the struggle among firms in managing the increasing volume of ESG data.
Additionally, the findings revealed that meeting regulatory requirements (35%) topped the list of priorities for accessing ESG data, followed by addressing climate risk and achieving net zero objectives (18%).
Data transparency – ESG data availability, quality and consistency challenges
However, concerns over the coverage and quality of company-reported ESG data loom large, with 63% of respondents citing it as their primary worry.
The researchers anticipated the implementation of the Corporate Sustainability Reporting Directive in the EU to augment the quantity and quality of such data, necessitating seamless integration and management to avoid impeding investment decisions.
The foremost challenge in ESG data management, according to the survey, is navigating the constantly evolving and new data content (41%). Following closely is the task of linking ESG data content to existing entity and instrument data (25%), along with meeting reporting requirements (18%), and managing multiple ESG vendor feeds (16%).
Despite the significance of addressing ESG data coverage gaps, onboarding new ESG data remains a resource-intensive process, often conducted once or twice a year due to constraints on time and resources.
Conquering the ESG data and reporting challenge
Amid these hurdles, firms are grappling with the optimal approach to handle the burgeoning volumes of ESG data. While around 38% manage their ESG data centrally using a proprietary solution, another 32% opt for individual management by each business unit. A minority (10%) outsource to third-party vendors, while 20% are deliberating their data management strategies.
“While quality and comparability remain a global challenge, data management is coming into sharp focus for firms in Europe,” said Nadia Humphreys, head of sustainable finance data solutions at Bloomberg.
