Global asset and wealth managers cite insufficient data and technology as undermining their goal to implement ESG into their investment processes, according to a survey conducted by SIX Group.
In a recent report, 41% of the 143 global buy-side C-suite executives surveyed agreed that the development of ESG-related capabilities/offerings for clients was either important or critical to the way that they ran their business. This contrasted with 15% who do not recognize it as an important area.
However, both agreed that there are clear data and technology challenges when it comes to incorporating ESG effectively into the investing process on a consistent basis. The most common gap in the market that was identified by asset managers was for raw/underlying ESG datasets to help them to effectively assess the ESG credentials of particular investments for themselves, rather than having to rely on supplied ratings, which can vary wildly from provider to provider.
Wealth managers took a different stance though – 45% had a desire for fundamental, prepackaged ESG ratings. This can possibly be explained by the fact that 26% believed that the most in demand services to help drive their business forward is data & analytics, and advanced quantitative skills – the most common responses. A lack of data expertise from wealth managers could be why they prefer fundamental ESG ratings to raw ESG datasets – to limit the amount of analysis that they need to do.
What both asset and wealth managers broadly agreed on however, is that there is a lack of adequate technological capabilities in dealing with ESG investments, with over a third of respondents from both groups citing this as a main challenge. Additionally, over 40% of buy-side respondents wanted greater support with automated regulatory risk management solutions tailored for ESG reporting.
Commenting on the results, Marion Leslie, Head Financial Information and Member of the Executive Board of SIX opined: “Different market participants have different needs when it comes to ESG data. What they have in common is a need for standardized, reliable, comprehensive and accessible data. SIX understands the drivers of these different needs, and offers appropriate services to support them.”