Financial institutions

ESG awareness among financial institutions has increased

The Business for Good – Unlocking the Sustainable Impact of ESG Data webinar invited Olivier Ménard (Head of the Green & Sustainable Hub, Natixis Corporate and Investment Bank), Karen Ho (APAC Head of Buy-side Researcher & ESG Market and Product Specialist, Bloomberg LP), Kristy Wong (Associate Director, ESG Investing Specialist, Amundi), Amy Zhang (ESG solutions and product strategist, Societe Generale) as guest speaker and moderator Helina Lo (Managing Director, Sia Partners) to share and explore options for addressing ESG data barriers.

Sia Partners presented the main challenges that most companies face around ESG, followed by Olivier Ménard, Head of Green & Sustainable Hub at Natixis, sharing the following; “With the increase in ESG regulations all pushing towards standardization and harmonization of ESG taxonomy, a repository tool should be put in place to allow any financial or ESG data to be inserted as a point of reference. single entry, for the purpose of improving data accuracy and benchmarking.”

Amy Zhang, ESG Solutions & Product Strategist at Societe Generale, echoed concerns about data quality. Layers of consideration must be applied to ensure data quality. “You need to understand what’s behind the methodology, assumptions and limitations and understand what ESG questions your clients are trying to answer. There is always a big data availability problem in the global markets when we create products. Typical issues encountered include sparse data in certain asset classes and geographies, and less mature data for bond issuers as more stringent ESG data disclosure requirements are imposed on equity issuers.

Although there have always been strong controversies over ESG ratings, ranging from their easy manipulation to a non-transparent calculation methodology, Associate Director and ESG investment specialist at Amundi, Kristy Wong, said her firm had integrated the rating of nearly 15 external data providers to increase their confidence in ESG ratings. “We have developed our own proprietary ESG rating methodology based on a best-in-class approach.”

When asked how data providers could ensure comprehensive data sources to deliver quality ESG scores and ratings, Karen Ho, head of ESG buy-side and market research and product specialist at Bloomberg LP, explained that “one of the barriers to ESG data quality is the non-standardized and unstructured presentation of the scope of the data. As a result, manual work is required to validate the information, usually via public ranking rather than presentations. Due diligence in defining business rules, comparing historical data and understanding data is a must.”