Closing the disconnect in ESG data in financial services: Part 2

The financial services industry’s shift toward a business model that embraces environmental, social and governance (ESG) factors is a powerful movement with unstoppable momentum. But as firms such as banks, insurers and asset managers think about how to do good while also doing well, they face some fundamental questions. What does good look like — and how should success, or otherwise, in progress towards it be measured. These are just a couple of examples.

These are not simply academic questions for financial services leaders. In a world in which their stakeholders are increasingly determined to hold them to account, the ability to provide a detailed and verifiable account of ESG performance is vital — both of their own performance, as well as that of the organizations they finance. Regulators now expect nothing less — and are raising the bar on what constitutes detailed and verifiable. So, too, are the industry’s customers, employees, and investors. Baseline levels of disclosure are already higher than ever and are expected to continue to evolve and mature.

This is the second of three in-depth analyses into ESG data challenges and opportunities across the financial services sector. In the first paper, we outlined where ESG data is lacking and the problems this is causing. Now, we discuss how to move forward and investigate how the evolution of regulation both raises the bar on ESG data while also bringing some of the solutions; we consider where ESG data is to be found, including previously inaccessible pools of information and we discuss the technologies and approaches that the industry currently has at its disposal.

The challenge is to build a next generation model for ESG data. The current picture is indistinct and patchy — now is the time to fill in the gaps and sharpen the focus.