Mining for ESG data – the new gold of the financial information industry?

By Danae Quek

In recent years, the letters E, S and G have never been more popular. In the world of finance, environmental, social and governance (ESG) issues have risen to the top of the agenda with market participants across the spectrum discussing it in one way or another. Investors have become more socially conscious, choosing ESG over more traditional investments and with good reason given their performance in recent months.

The growth of ESG investing also brings with it various opportunities for all market participants, especially for data information providers who have the knowledge and information that the market requires.

According to a recent report by UBS, the ESG data services market could more than double to over $5 billion by 2025. Even assuming a worst-case scenario in which ESG performs poorly and the focus on ESG reporting falls, UBS anticipates the ESG information services TAM to only dip to $2.1 billion by 2021.

These results indicate that ESG data, research and analytics represent a meaningful opportunity for information services providers. There is also likely to be an increased focus on system reliance following the disruption caused by COVID-19, placing even more importance on the role of data and analytics in assessing the outlook for ESG, which should benefit information services providers further.

Financial data has long been the most valuable asset in the financial industry and with ESG continuing to increase in popularity and relevance, there exists a growing part of the data pool for financial information providers to tap into. The mining, refining and provision of relevant ESG data will go a long way in servicing the financial industry, helping companies define their strategies and their definitions of ESG, allowing investors to make informed investment decisions and potentially helping the industry as a whole take steps towards reaching a consensus on what constitutes as ESG.

As ESG continues to dominate headlines, it is clear that now is the time for financial information providers to work on increasing their profile in the market to make the most of the business opportunities this boom will create. They will need to look at the bigger picture, creating a strategic communications plan that incorporates their current view of the benefits of ESG data and also the future of ESG data – explaining why it is here to stay and what’s next. Most importantly, they must develop messaging with strict definitions of the E, S and G requirements they place on data, ensuring they follow these standards and are able to explain why they have chosen such definitions.

These factors should all come together in a proactive approach to communications on ESG, using global events such as COP 2020 to raise awareness around the need for ESG data and highlighting their unique offering and approach to defining, refining and processing such data. Doing so will ensure that they stand out from the crowd of numerous data providers looking to capitalise on the popularity of ESG. They will be able to demonstrate that their focus on ESG data is done with the long-term future in mind and that this is more than a passing fad in investor behaviour – it is quickly becoming a mainstay of investing. At Aspectus we are experts in this proactive approach to communications. We help clients stand out from the crowd and position them as experts in the field of financial and ESG data, as well as in the broader socially responsible investing (SRI) and impact investing spaces.

As these three letters continue to dominate the investment press, it will be interesting to see market participants and financial data information providers in particular develop innovative and competitive ESG data offerings that evolve with the market and investor demand. ESG is most certainly here to stay and it will be fascinating to see how the industry reacts to these ongoing developments.

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