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Meeting the New Challenges of ESG Data and Tech

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The ESG space is evolving rapidly, and for three years A-Team Group’s ESG Insight has been tracking its transformation. Now it’s time for us to evolve too.

From next week, we will continue to provide our sustainability data and tech blogs, news and views through our core brands – Data Management InsightRegTech Insight and TradingTech Insight.

It’s a bold move but one we feel reflects the changing nature of the ESG space as it moves into a new era of greater data reliance, artificial intelligence-driven processes and broader regulatory oversight.

Swift Development

Since the sustainable investment project went into full swing about a decade ago, ESG considerations have become firmly integrated in the data processes of financial institutions. This is a remarkable shift.

In the early days, traditional suppliers of financial data scrambled to put together the then niche non-financial datasets requested by investors who wanted to put their money into companies that made a difference to a warming climate and social ills. Their operations became more sophisticated as regulators began to promote and monitor these burgeoning sustainability markets.

Change hastened change and specialist data vendors quickly emerged, enabling firms to cherry pick datasets on the specific ESG factors that are most material to them. Now, AI is helping to refine research and operations, and more importantly, mine trends and patterns in data that can lead to better investment and risk decision making.

From the days of one-stop-shop providers, we now have innovative operators offering data on everything from corporate emissions, biodiversity and nature loss, through to human rights controversies and sanctions.

A New Venture

In 2021, A-Team Group established ESG Insight to reflect this fast-changing space.

In that time some of the toughest challenges facing the space have begun to be resolved.

  • The International Sustainability Standards Board’s guidelines were announced, setting a path for the streamlining global reporting standards.
  • The Sustainable Finance Disclosure Regulation and the Corporate Sustainability Reporting Directive in the European Union were implemented, creating rules that are expected to stimulate – and ensure the validity of – better and fuller ESG data disclosures.
  • The application of AI has begun helping firms to extract more value from their sustainability data.

The challenges that faced ESG markets when we founded ESG Insight have changed significantly. And so it is time for A-Team Group to reflect those changes.

Shifting Priorities

Our polling has shown that, by a substantial margin, the challenges facing institutions have begun to shift. Data quality – and by extension, data sourcing – is still a tricky hurdle. But our most recent ESG Data and Tech Summit in London showed that its relative importance is waning as data gaps close and quality improves.

Firms are now focusing increasing attention on tackling the enormous data management and regulatory challenges that the sprawling ESG space has fostered. The volumes of unstructured data flowing into firms’ systems is expanding every day, putting strain on their technology setups and their newly established teams of data scientists. Regulatory compliance professionals are also under intense pressure to adopt new use cases and adapt existing processes to meet fast-evolving reporting requirements.

Fresh Approach

These shifting priorities mean that the task of reflecting this new phase of opportunities and challenges will be best served not through an ESG-specific lens but through one that takes a broader view of sustainability data’s management and its uses.

ESG has evolved into a business-as-usual part of firms’ operations. That isn’t to say it is no longer important. In fact, the opposite is true. Ten years ago, there was no ESG data. Now it is an integral part of the global financial system, helping to foster a sustainability market that estimated to account for around US$35 trillion of assets by the end of the decade.

By covering ESG within its wider data management context, A-Team Group is recognising that sustainability has properly “arrived” and that its coverage requires a more holistic approach.

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