With concerns over the ‘greenwashing’ of sustainability performance amongst organisations, identifying those ESG data providers who present information with transparent methodologies has never been more important.
In September 2021 we published the findings of an independent survey of the evolving Environmental Social and Governance (ESG) data provider marketplace. Over 300 data vendors were analysed through multiple sources, including direct 1-on-1 interviews with over 200 potential data vendors to construct a database of high quality providers, including those new to the market, as well as and the longer-standing firms.
Our findings include:
– Whilst many consumers of ESG data select well-established institutions as their supplier, we discovered an extremely rich and diverse ecosystem of providers outside of the ‘household names’.
– Start-ups (1-5 years in existence) already make up over a third of market supply, some 39% of Substantive Research’s list, while Mid-level (started 6-10 years ago) and Established firms (started 10+ years ago) constitute 24% and 37%, respectively.
– 53% of the providers are generalists, in the sense that they provide all three Environmental, Social and Governance data to clients while only 33% specialize in ‘E’, ‘S’, or ‘G’ only. As the ESG process within asset managers evolves, shopping for data is likely to increasingly target specialists, as buy-side firms look to create their own ‘special sauce’.
– Of these specialists, just 5% are targeted towards Social, 70% specialize in Environmental and 25% in Governance.
– 70% of the providers have developed their own ESG frameworks in combination with one or more of 20 other global sustainable reporting standards.
Substantive Research’s Role
We have developed an industry-first, ESG Data Provider Dashboard that provides a searchable database of more than 140 ESG data providers, mapping out the ESG data market and showing the choices available. This gives clients the opportunity to discover and compare suppliers of ESG data all in one convenient place, as well as providing confidence that they are gaining accurate views of actual ESG performance. Our ESG dashboard was launched in June of this year, and is already helping 30+ buy-side clients make sense of the rapidly evolving ESG data provider marketplace and find the right providers for their needs.
Substantive Research monitors and curates investment research and provides data-driven analytics on research spend to buy-side professionals who manage assets from $500million to $3 trillion and represent a combined AUM of more than $10 trillion.
Via the Substantive Research platform, asset managers can compare their research allocations and processes and benchmark consumption habits versus their peers, to optimise their overall research spend. They can also receive bespoke research from a range of analysts and providers, matched to the needs of their portfolio managers and interests of their investment teams and processes.
Research from 350+ banks and independent research providers and benchmarking analytics are provided in a MIFID II compliant manner ensuring that portfolio managers, brokers, heads of research and procurement have a transparent budget overview and the ability to evidence appropriate research payment levels for regulatory compliance.
In 2021, Substantive’s offering expanded to include an ESG Dashboard that provides a searchable database of more than 140 ESG providers, mapping out the ESG data market and showing the choices available. This gives customers the opportunity to discover and compare suppliers of ESG data all in one convenient place, as well as providing confidence that they are gaining accurate views of actual ESG performance.
Many thanks for the input for this article from ESG Consultant Kalyani Inampudi, currently also working with Substantive on our ESG dashboard!