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Data is the bane and boon of addressing sustainable investment gap
VENDOR VIEW: DATA Data is the bane and boon of addressing sustainable investment gap
Wielding this tool the right way is key to pushing and meeting ESG goals, says Experian’s Sisca Margaretta.
The lack of standardised, defined benchmarks means much of the ESG data companies are providing right now is not useful enough to support investment decisions
Whilst data holds the power to make more informed ESG-related decisions, there is a gap between what companies need versus what data they currently have.
“A few years ago, we didn’t have enough data available to support ESG investing. Whilst there is much more data now, it’s fragmented across different sources, including company reports, news articles, data vendors, and rating agencies,” Sisca Margaretta, Chief Marketing Officer, EMEA & APAC at Experian, explained to Asian Banking & Finance in an interview.
In a separate study, professional services firm EY also found that 46% of asset managers and 25% of banks find the lack of real-time data on ESG to be limiting.
We have ample information to drive fund allocation towards sustainable causes if we interpret it efficiently
right now is not useful enough to support investment decisions, the Experian expert added.
“Beyond problems like inadequate disclosure and data availability, a lot of companies today also adopt practices like ‘greenwashing’ – which refers to using marketing tactics to over-amplify their ESG efforts – to gain favour from stakeholders,” Margaretta warned.
In a survey of 6,000 bank customers globally, cloud platform provider Mambu found that over 67% of respondents believe that their banks are guilty of greenwashing: that is, they believe that their banks are overstating their sustainablerelated efforts. In financial hub Singapore, that’s 68% of respondents.
This is where a system of checks and balances becomes essential to make sure that any and all ESG data is accurate, honest, and reliable, according to Margaretta.
Sharing the right information is also key to ensuring that consumers are aware of banks’ ESG.
Raising investments
Beyond beating away reputational risks and meeting the increasing sustainability mandates of both regulatory bodies and the public, the right use of data can also encourage and push up investment activities in the ESG space.
“When reliable and adequate data is made available, investments tend to rise. Given that over 90% of the world’s data has been created in the last five years, we have ample information to drive fund allocation towards sustainable causes – provided we choose and interpret it efficiently,” Margaretta said.
Margaretta noted the growing awareness around ESG investing over the last few years, which in turn made it a central concern for
A chief player to this push is the younger generation of investors, who are “passionate about addressing systemic concerns”
Whilst there is much more data now, it’s fragmented across different sources (Photo: Sisca Margaretta, Chief Marketing Officer, Experian)
the financial sector. A chief player to this push are the younger generation of investors, who were noted to be “passionate about addressing systemic concerns like climate change and social inequalities.”
“As this cohort moves up the corporate ladder, they have more assets at their disposal to address these issues through responsible investment,” she added.
Another factor is increased global awareness for action towards environmental preservation, culminating with the UN Climate Change Conference (COP26) held late 2021, which further brought this issue to the forefront for both governments and private players.
These factors are collectively enabling massive growth in both the volume and diversity of ESG investing, and it is now estimated that ESG assets will account for a third of the projected total assets under management globally, surpassing $41 trillion by the end of 2022 and $50 trillion by 2025, according to Margaretta.
All these makes data all the more a necessary feature of winning in and thriving at the sustainable finance space.
“They can also go a step further by integrating different datasets into a comprehensive view – eliminating the bulk of noise, whilst retaining the information that truly matters,” the Experian expert added.
“Analysing and processing ESG data is a relatively new and evolving concept. The industry needs to remain agile in order to continue adapting to developments in the landscape,” Margaretta concluded. The Green and Sustainable Finance CrossAgency Steering Group has launched the Sustainable Finance Internship Initiative, which aims to create more internship opportunities in Hong Kong for students, as part of a collaborative effort to build capability for the industry.
The initiative offers students an opportunity to gain practical hands-on experience in sustainable finance, to deepen their understanding of this sector and related career prospects in hopes of inspiring them to specialise in this field.
To facilitate access to sustainable finance internships, postings will be centralised at the internship repository of the Centre for Green and Sustainable Finance. The Hong Kong Monetary Authority, the Securities and Futures Commission, the Insurance Authority and the Mandatory Provident Fund Schemes Authority are encouraging their respective constituents to join the Initiative. Steering Group agencies will also soon commence hiring interns to support their own policy and market development work in sustainable finance.
Established in May 2020, the Steering Group is cochaired by the Hong Kong Monetary Authority and the Securities and Futures Commission. Members include the Environment and Ecology Bureau, the Financial Services and the Treasury Bureau, the Hong Kong Exchanges and Clearing Limited, the Insurance Authority and the Mandatory Provident Fund Schemes Authority.
Hong Kong steering group launches sustainable finance internship programme
