Common ESG Data Problems And How To Fix Them

Rising ESG Focus Is Driving Demand For New Data…

As the global significance of ESG data grows, so does the need to gather it effectively. The data is often obtained from numerous sources, and is interpreted differently from firm to firm. As such, despite investor demand for ESG-focused products and services, there are significant risks to consider.

In our experience, a significant problem is that most managers aren’t properly documenting how their ESG data is being used, nor applying adequate controls to it, which is evident in a number of irksome ‘symptoms’ you’ll find across functions, including:

• Inconsistent sources being used for the same ESG information across investment and distribution teams.
• More and more client and internal queries regarding ESG metrics or analysis.
• Increased incidents of client complaints and audit issues regarding data usage.

And while this might seem manageable in the short term, there’s a risk that left unmanned, it could mushroom into a much bigger issue further down the road.

More Often Than Not The Issues The Business Sees Are Linked Directly To Issues With The Management Of ESG Data…

The key is to implement a central control in your organisation. That way you can ensure that the ESG data sources that you use are interpreted and distributed correctly, both inside and outside the firm. At the moment, what often happens is that multiple data providers are used for ESG metrics, which leaves you with an inconsistency of sources across investment and distribution teams.

Unsurprisingly, this results in a lack of clarity around what data might already be available and how it’s supposed to be used - cue an influx of queries from clients and employees who need ambiguous metrics explained or investigated.

How We Can Help

Thankfully, when it comes to helping organisations to understand and manage their ESG data, we have real expertise. To help you solve your problems, we can…

• Ensure you have the right ESG Data Architecture in place.
• Design and implement an operating model that will manage your ESG data.
• Help you to define your ESG strategy and objectives.
• Implement the PEN Data Governance Model around your ESG data, which helps in terms of establishing ownership and transparency throughout your organisation.
• Make sure you have all the right ESG tools for your company.
• And, very importantly, we’ll ensure your ESG data is accurate and of the highest quality.

If you’re having trouble unlocking the full potential of your ESG data, or would like to know more about how to manage it correctly, do get in touch with Barry Chapman or Leo Chancellor. We’d love to hear from you. 

On 4th April at 4pm we're running a webinar in partnership with Informatica, to discuss:

• The changing regulation and reporting landscape
• Common trends both PEN and Informatica are seeing with clients
• How data governance and data tooling can help

To be part of the conversation, sign up here.