Environmental, Social and Governance (ESG) data is in high demand. Financial institutions are increasingly realizing that ESG data is an invaluable risk assessment tool, drives innovation and aids in regulatory compliance.

Evolving Regulatory Landscape

Global ESG policies and frameworks are evolving rapidly and there is a good deal of speculation regarding what additional changes will take place in the future.

With the creation of the UN Sustainable Development Goals, the signing of the Paris Agreement and aspirations to achieve a net-zero emissions future, ESG related disclosures that were once voluntary are fast becoming mandated. 

In March 2021, the EU’s Sustainable Finance Disclosure Regulations (SFDR) came into force — the regulations focus on disclosures and apply to all financial market participants in the EU. 

The Task Force on Climate-Related Financial Disclosures (TCFD) has recommended compulsory sustainability reporting and the UK will become the first G20 nation to enshrine it into law, with large UK-registered companies having to disclose climate-related financial data beginning in April 2022.

The Challenge 

As financial institutions begin to adapt to the fluid regulatory environment, both nationally and internationally, access to reliable and consistent ESG data is fast becoming a necessity. 

A lack of convergence in data standards and the growing and diverse universe of data, with varying coverage and capabilities, demands the ability to test and trial multiple external data sources in order to ensure the accuracy of underlying information . 

The Opportunity 

By integrating multiple external ESG data sources into business operations, decision making processes, or reporting activities, financial institutions can replace, supplement or automate existing processes that rely or benefit from ESG data. 

External ESG data solutions can be applied to geographies, businesses, securities, customers, projects or transactions. Common data capabilities leveraged include:

• ESG data enrichment / validation / imputation 
• Scoring / rating 
• Indexing / benchmarking
• Screening / flagging specific activities
• News and controversy alerts
• Social sentiment analysis
• Geospatial analysis
• Regulatory alignment

ESG Data Demystified

Demyst can help organizations tap into the ESG data universe through an external data platform that provides access to thousands of data products worldwide. 

The ESG space is diverse and rapidly growing — some external sources utilize Natural Language Processing (NLP) to derive  real-time market sentiment data, while others provide proprietary ratings that measure a company’s ESG performance or risk,  whilst others offer deep insights into specific niches in the landscape. 

While data from each type of source has value, leveraging data from multiple sources enables deeper insight, the development of more robust risk assessment models, and helps aid alignment to current and future regulatory frameworks.  

Questions? Please create a free account and reach out to Demyst’s international 24/7/365 team via the in-platform chat or send an email to support@demystdata.com.