Research & insight

Environmental Finance Future of ESG Data 2023 post event reflections

By
James Phare
October 18, 2023
 min read
 min watch
Environmental Finance Future of ESG Data 2023 post event reflections

Research & insight

Environmental Finance Future of ESG Data 2023 post event reflections

By
James Phare
October 18, 2023
 min read
 min watch

These reflections were originally posted by the author on linkedin.

Getting up on a dark, frosty, monday morning at 5.45am (joys of new found rural life!) I'll admit to apprehension on whether my energy levels would sustain a full programme of ESG ratings methodologies, data & disclosure standards, single / double / triple materiality etc. My concerns proved ill founded however - kudos to Peter Cripps & Environmental Finance for putting on a really great event!

It felt like there was a distinct difference in this event to many others I've attended in recent years with little time was devoted to abstract truisms ("what you can measure you can manage..." etc.) & a shared acknowledgement that working within sustainability data right now is an incredibly FAST moving necessitating a healthy dose of pragmatism.

The EU Taxonomy is increasingly being used to classify key fundamentals such as capex, opex and revenues as green

A few post event thoughts whilst fresh

🔌 Everyone detests term "interoperability", even the standards setters....Fortunately consolidation continues apace with new collaborations like EFRAG & CDP

💲 ESG Data market now worth $1bn apparently

📉 Systematically assessing corporate transition plans still challenging but another fast changing area with initiatives like the Transition Planning Taskforce (TPT)

🔣 ESG Data Quality remains woeful in many areas with low auditability, low coverage, opaque methodologies, difficult to defend estimates & a general lack of accountability amongst ESG data providers. Some tragically comic examples throughout the day covering things like backfilling Scope 3 estimates based on sector averages

💻 European Single Access Point (ESAP) will revolutionise how investors access & make decisions with comprehensive ESG data coverage for companies in scope for ESRS & beyond. With free to access data, the right data standards, data architecture & using SEC Edgar as benchmark this could be a real game changer if implemented correctly with a well documented data model / ontology & good data standards (solid open symbology is a must!). Extended implementation timeline to 2027 means we'll need to continue using ML-powered disclosure tools for a while yet💯 ESG ratings have served their purpose for ESG 1.0 & need to radically evolve to stay relevant in a landscape of abundant, free to access raw ESG data. ESG data consumers whilst welcoming abundance of indicators (e.g. the 1.4k of EFRAG) need effective filters & contextual data.... (watch this space)

💹 Strongest use case to justify ESG tech and data investments remains alpha generation (some would say alpha of the neural variety... 😉 )

🧠 Knowledge Graphs increasingly being adopted by leaders for data integration and analysis 💕 Personal highlight for me was Andrew Ang's talk on using alternative ESG data for alpha - some great examples of using proxy indicators for measuring fuzzy concepts like corporate culture, unconventional DEI metrics such as veteran employment & green patent registrations

Andrew Ang of Blackrock Systematic Strategies gives a glimpse into their ESG Knowledge Graph
Here's to next year - we will certainly be in attendance again!
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James Phare
James Phare
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