If you weren’t able to catch the webinar live, here is your chance to get the highlights from our expert panelists. In this blog, we’ll touch upon the main themes discussed during the 45-minute panel. During the webinar, we heard from a wide spectrum of ESG participants offering their perspectives based on their backgrounds as members of NGOs, index providers, and academia.
The panel featured:
Coley Schiro, Head of Sustainable Investment Data Operations, London Stock Exchange Group
Dr. Julie Salsbery, Faculty Lecturer, Georgia State University
Peter Dunbar, Private Equity Specialist, UN-PRI
Robin Millington, Chief Executive Officer, Planet Tracker
During the lively discussion, a couple of the themes that repeatedly emerged on the current state of ESG reporting were data integrity and the wide array of data needs.
The data integrity discussion focused on understanding what data tells us (along with its limitations) and whether you can trust it. While current studies suggest a correlation between ESG and financial performance, Julie pointed out that, this will need to be continuously studied as ESG data are still relatively novel, cover short periods of time, and routinely undergo reporting changes. Coley went on to emphasize the need for transparent and objective data collection rules, and both speakers cautioned that ESG data consumers must be mindful of “knowing what we don’t know.”
Peter provided a unique perspective into the acuteness of this problem for Private Equity. The overall lack of information for private companies and the challenges of public reports are driving ongoing UN PRI efforts to support regulations for reporting. Expanding on the limited availability of ESG data, Robin noted that the industry is suffering from carbon-lensing, or heavily emphasizing carbon and climate data. At the same time, other E, S, and G factors are overlooked.
So, what about the information that is there? Robin cautioned everyone to beware of zombie data or data that cannot be traced back to the original source. Given the lack of a single repository for storing ESG data, this issue is quite common and raises concerns surrounding credibility.
Wide variety of needs. As Coley mentioned, today’s ESG has moved far beyond the SRI focus from a decade ago. The flow of money into ESG investments signals overall client demand, which has been accompanied by growing expectations that asset managers will “solve” clients’ specific ESG needs. Hence, managers find themselves needing to go beyond and behind ratings for a multitude of client requirements and mandates. This is a growing issue, with much of the existing information taking a one-size-fits-all approach.
The variety of needs also speaks to the variety of the users and where they are on the ESG path. Asset classes like fixed income and private equity, for example, still trail equities in integrating ESG into decision processes. As for PE, Peter explained that not only is it a diverse asset class, but there is also significant variance in firms’ level of ESG sophistication. For those firms at a low point on the learning curve, the increasing and fluid nature of ESG data present an even greater challenge.
Investor mandates and expectations will drive ESG data going forward. In paraphrasing Mark Carney, Robin stated that ESG measurements reflect both “what we value and our values.” As ESG data will continue to evolve, consumers must be aware of what the data is telling them, what they don’t know, and whether the data is reliable.
Access the on-demand webinar here.