Tighter ESG reporting standards will beget better data management. Asset managers need to seek out high quality data, analyze that data and ensure their investment teams are integrating it in a meaningful way for it to be effective. The ability to analyze large data sets is a competitive advantage; investors want to know what the data looks like and what conclusions can be drawn from it — for instance, the impact of certain social information or greenhouse gas emissions on their investments risk profile. Of course, data is not without its problems. Long-standing lack of availability, consistency or, in some circumstances, relevance (ESG information that is material for one company or asset class may not be relevant for another) continues to be an issue.
This requires a rethink of how an asset manager operates in order to create an ecosystem of data management. Third-party technology platforms are already available, but given the complexity, many asset managers are looking to build their own proprietary, cross-functional systems in-house to achieve what they want for their clients. They are hiring different profiles from what ESG teams have traditionally looked for — for example, IT and data experts who sit within ESG teams supporting this advanced analysis. Some have gone so far as to acquire data management companies in order to build their in-house capability faster.
The scale and scope of ESG data is growing at an exponential rate. We are now seeing a once-in-a-generation shift as the industry moves toward more IT and data-centric organizations. Enhancements to data quality, integrity and processing capabilities will further accelerate the pace of adoption of ESG investing.
Source: https://www.pionline.com/industry-voices/commentary-despite-recent-debate-esg-investing-here-stay