GoldenSource has introduced ESG Impact, an ESG solution based on its established data management capabilities and designed to provide ESG data coverage, comparison, quality checks, and portfolio screening. The company is working with about 20 ESG data vendors to understand their materiality maps and use its established data model to correlate data at intake and make ESG data, such as scores, ratings and metrics, comparable and therefore useful to investment decisions and strategies.
GoldenSource Impact also offers portfolio screening, which allows users to look through portfolios to instruments and their issuing legal entities to see related ESG content, and includes historical data to ensure changes in ESG status over time are visible and can be acted on, as well as an analytics layer to identify issues such as historical trends in ESG data. In-bound APIs allow clients to take in more or different structured or unstructured data from existing or new data sources, data quality checks can be made, while completeness, staleness and plausibility checks can cover discrepancies in vendor data to help users understand which provide the most trusted data and avoid greenwashing.
The solution is currently being developed and is due for general release in Q3 2021 as both an on-premise solution integrated into the technology stack and a managed service allowing clients to submit portfolios for screening and automatically receive ESG data that they have subscribed to.
Volker Lainer, vice president of product management and regulatory affairs at GoldenSource, says: “The client challenge is how to make sense of a vast universe of ESG data points. When these are understood it becomes possible to build functionality on top of them. GoldenSource Impact is about the capability to correlate what is comparable, deal with things that are similar but not necessarily exactly the same, and not force the data into golden copies.”
The company is working with about 20 ESG data providers from niche vendors such as SIX Orenda, which taps Twitter and uses AI to provide real-time and high-frequency ESG scores, to large data vendors such as Bloomberg, which offer broad ESG data sets covering information about thousands of companies on a worldwide scale. More will be added every month.
The task of understanding vendor materiality maps and ESG criteria is painstaking, with a team of more than 30 GoldenSource analysts, including Lainer, manually analysing the content and methodology of each vendor’s materiality map and structuring it in a connected way – based on Golden Source’s Connections solution – to identify comparable data.
Lainer explains: “GoldenSource Impact can identify problems, perhaps a health and safety issue at a factory, and help users pull back and look for another company with better metrics and the same or better credit rating. In essence, it can help identify alternative investments where investments are not moving in the expected direction, and it can guide better investment decisions and allow firms to include multiple data vendors in their strategy while not drowning in data and trying to compare and correlate the data.”
He says clients want to use a number of ESG data sources and expects GoldenSource Impact to be used largely by buy-side firms, initially in Europe in response to Sustainable Finance Disclosures Regulation (SFDR), as well as for tasks such as monitoring the ESG metrics of portfolios over a year, and using historical data to view ESG metrics of a company at the current point in time as well as how they have evolved over time. That said, there is also a need for sell-side firms to have a grip on the ESG metrics of their products.
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