With a growing expectation from firms to meet environmental, social, and governance (ESG) standards, enterprises are transitioning towards ESG data providers and searching for authentic ESG data sources.
Environmental, Social, and Governance (ESG) data is becoming an integral part of investment decision-making. ESG data offer insights into a company's sustainability practices, enabling investors to evaluate risks that traditional financial metrics cannot capture. There are different types of ESG data sources available. Let's explore some of the significant ESG data sources-
Types of ESG Data Offered by Providers
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Market Data
Market data is information related to market values, prices, commodities, and other elements of market trends. This data can also include any factors that involve long- and short-term operations and strategy. Providers, including FTSE Russell, MSCI, and Bloomberg, offer ESG data related to topics like carbon emissions, fossil fuel reserves, and climate change.
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ESG-Exclusive Data
With ESG reporting becoming more central to corporate sustainability goals, ESG data providers offer more than market analytics. They specialize in ESG- and sustainability-related data, ranging from ESG data analytics to ESG scores. By employing proprietary metrics and risk-assessment tools, these data providers compile information for assessments.
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Specialized Data
Specialized ESG data providers concentrate on one or two elements of ESG. While some concentrate on climate and environmental data, others prioritize governance matters and community relations. This information is a vital asset for enterprises exploring ways to enhance their ESG performance as well as identify risks and market opportunities.
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Since its introduction, ESG reporting has transitioned from a valuable extra to an essential element of modern investing. To drive capital towards a sustainable future, organizations need to power their environmental, social, and governance (ESG) strategies with industry-leading data research and expertise. By embedding comprehensive ESG data in every aspect of their investment process, they can integrate transparency into the company's ESG performance.
However, to generate comprehensive reports, reporting entities require the latest and most accurate ESG data that encapsulates a wide range of metrics and measurable outcomes. Incorporating ESG into investment decisions will help in connecting ESG data with innovative workflow and flexible delivery options.
For reliable and comprehensive data, organizations are turning to ESG data providers. These statistical specialists present organizations with a range of informational solutions to help them expand their sustainability programs and improve investor engagement.
ESG Data Sources in the Market Today
Differentiating among the plethora of ESG data providers to support the organization's requirements can be a challenging task. However, there are a few industry-renowned data providers who won the majority of the market share. Every ESG data provider has their methodology to determine ESG ratings by weighing in factors uniquely. This is the reason why certain firms find it useful to subscribe to more ESG providers and then average their rankings. ESG Data provider ranking systems involves a fair share of statistics, mathematical calculations, and trust, which is why many firms choose to opt for two or more of the larger ESG providers.
Mentioned below are some standout sources that have deeply grasped the ESG market and offer organizations comprehensive research and precisely constructed rankings.
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Corporate Sustainability Reports
Corporate sustainability reports are disclosures made by organizations to offer information related to their sustainability practices. These reports offer valuable insights and information on companies' environmental, social, and governance (ESG) policies, strategies, as well as performance. Investors can employ this data to evaluate an organization's commitment to sustainability and its impact on society as well as the environment. As an ESG Data source, corporate sustainability reports are rich with data, but it can come at the cost of infrequent updates or lack of standardization.
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Regulators
Industry regulators, the Securities and Exchange Commission (SEC), are mandating companies to disclose their ESG-related information. The SEC requires businesses to declare climate-related risks that enable investors to assess the impact of climate change on their operations and financial performance.
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Non-Governmental Organizations (NGOs)
Global NGOs like Greenpeace and the World Wildlife Fund (WWF) collect and facilitate ESG data on companies. NGOs offer valuable insights into a company's environmental impact along with their social responsibility, including labor practices and human rights.
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Social Media
Social media platforms offer insights into an organization's ESG practices. A company's social media posts often provide information regarding its sustainability initiatives, its involvement, and its contribution to the community, as well as employee engagement. With the new wave of alternative ESG data sources on the rise, data providers are offering additional ways to accumulate the right insights.
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ESG-Rating Service Providers
ESG rating providers like MSCI and Sustainalytics offer organizations comprehensive ESG ratings. These ratings help in evaluating a company's sustainability practices based on different ESG factors like carbon emissions and board diversity. Investors can use these ESG ratings to compare companies and make informed investment decisions.
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Choosing the Right ESG Data Provider
Selecting the right ESG data provider is a vital function for market maturity, budget, fund size, operational support, and growth goals. Organizations should ensure that the data sets they receive are reliable and comprehensive for their requirements and, at the same time, are delivered in a way the organization can easily parse and consume. While navigating the vendor landscape, they should also look for peer benchmarking and consider vendors that regularly update their information and stay abreast of any new trends that are likely to affect the firm’s investment decisions.
Top ESG Data and ESG Rating Provider Companies
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Morningstar Sustainalytics ESG Risk Ratings
A subsidiary of U.S. financial services firm Morningstar, Sustainalytics provides organizations with over 30 years of ESG expertise. The firm has grown to cover 20,000 companies and 172 countries globally. Sustainalytics estimates material ESG risk and issues reports that enclose a company rating, risk, and company analysis, material ESG issues, and ESG risk decomposition.
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MSCI ESG Ratings
Securing a top position spot with Sustainalytics, MSCI is considered one of the most reliable ESG data providers. They contain data reports on over 8,500 companies and 680,000 equity and fixed-income securities worldwide. In ESG investing, MSCI presents organizations with fund ratings, ESG indexes, ESG ratings, and sustainable finance solutions.
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Bloomberg ESG Disclosures Scores
Bloomberg is considered a leading provider of ESG data solutions. They also provide Bloomberg ESG Disclosure Scores. Their product includes historical data, along with sector and country-specific data points. They also offer organizations as-reported data as well as derived ratios.
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Moody’s Analytics
A renowned name for its credit risk ratings, Moody’s provides organizations with sustainability ratings, climate risk scores, and sustainable finance reviews.
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S&P Global ESG Score
S&P Global carries an unusual approach to ESG data and ratings. They base their ESG scores on companies’ responses to the Corporate Sustainability Assessment and a selection of publicly available data.
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Final Thoughts
ESG data can be employed for a plethora of corporate activities. Data providers assist organizations in aligning their data with existing ESG reporting frameworks. With multiple ESG reporting platforms mandated for use by regulatory bodies, it can be quite a challenge for organizations to meet legal requirements along with investors' demands for high-quality ESG data.
Today ESG reporting has become mandatory for organizations as investors are mandating ESG evidence. By collaborating with established ESG data providers, businesses can gain access to data gathered with rigorous standards and methods. This further guarantees accuracy and verifiability across all relevant metrics.
With a presence in New York, San Francisco, Austin, Seattle, Toronto, London, Zurich, Pune, Bengaluru, and Hyderabad, SG Analytics, a pioneer in Research and Analytics, offers tailor-made services to enterprises worldwide.
A leader in ESG Services, SG Analytics offers bespoke sustainability consulting services and research support for informed decision-making. Contact us today if you are in search of an efficient ESG integration and management solution provider to boost your sustainable performance.
