Organisations are worried about the quality of ESG data needed to meet reporting requirements
A Bloomberg survey of around 200 financial market participants from across Europe has revealed quality and coverage issues as their main environmental, social and governance data challenges.
The quality of ESG data is acknowledged by regulators and policymakers as a source of concern. Last year, the UK’s all-party parliamentary group on ESG said sustainability data is currently “not accurate nor comparable”, which can lead to “inadvertent greenwashing”.
Efforts are under way to improve the situation. In December 2023, the International Capital Market Association and the International Regulatory Strategy Group launched a voluntary code of conduct for ESG ratings and data product providers, focusing on upholding transparency, governance and boosting systems and controls in the sector. The EU, meanwhile, has adopted regulation aimed at better managing ESG ratings.
Sixty-three per cent of respondents to Bloomberg’s survey said data quality was their biggest ESG challenge, far ahead of the task of combining ESG with alternative data, such as geospatial information, including weather or climate datasets supported by satellite imagery (13 per cent).
Meeting regulatory requirements was the respondents’ main priority when it came to accessing ESG data (35 per cent), followed by fulfilling climate risk and net zero targets (18 per cent).
You can find the report in full here.