Bridging ESG Data Gaps with Technology

Aligning environmental, social, and governance (ESG) data with investor and regulatory expectations is a complex goal. Investors are demanding detailed insights into companies' ESG practices while regulators intensify scrutiny to prevent greenwashing and ensure credible ESG claims.

This dual pressure poses a critical challenge: aligning ESG data with the often-divergent expectations of investors and regulators.

The reality of ESG data alignment

The goal is for companies to provide transparent, robust, and comparable ESG data that meets the needs of all stakeholders. However, achieving this can be challenging in today's fragmented landscape.

As discussed in our webcast series on ESG data, key obstacles include:

• Diverging priorities: Investors and regulators often focus on different aspects of ESG, such as the SEC's focus on carbon emissions versus Europe’s broader climate risk considerations.
• Inconsistent data quality: Data availability varies widely, with public companies generally offering more robust information, while private firms, smaller businesses, and niche asset classes often face challenges providing reliable ESG data.
• Absence of standardized frameworks: Without a universal framework, comparing ESG performance across industries and regions remains challenging.
• Unclear methodologies: Limited transparency from ESG ratings providers makes it difficult for investors to evaluate alignment with their priorities.

Bridging the gap with technology

Innovative technologies can address the challenges of ESG data alignment, enabling organizations to meet the growing demands of both investors and regulators.

Some key benefits include:

• Broader data coverage: Technology platforms aggregate data from diverse sources, such as publicly reported information, direct submissions, satellite data, and predictive models. This expanded reach helps organizations capture more comprehensive ESG insights.
• Improved data quality and transparency: Advanced tools focus on ensuring data accuracy by prioritizing verified and reliable sources. Transparency into methodologies and data origins fosters greater trust among stakeholders, improving confidence in ESG reporting and decision-making.
• Greater flexibility and customization: Customizable features allow organizations to align ESG analysis and reporting with specific frameworks, stakeholder priorities, or industry requirements. This adaptability supports a more tailored approach to meeting varying expectations.
• Efficient reporting processes: Technology simplifies the complexities of ESG reporting by offering tools such as pre-built templates and automated workflows. These solutions help organizations efficiently align with regulatory and voluntary frameworks, saving time and reducing administrative burdens.

The path forward

By leveraging advanced technologies and fostering collaboration between investors, regulators, and organizations, ESG data alignment can become a more achievable goal. This progress supports not only investor confidence but also broader sustainability and governance goals.

How we help

Our dedicated ESG advisory and analytics practice helps firms of all sizes develop and monitor ESG programs to mitigate risk, make informed choices, grow profitably and sustainably, and combat greenwashing in the process.

Our ESG data & analytics solution, Ethos ESG, helps our clients understand and design metrics programs according to client/investor preferences, track those metrics and report on progress over time, and advise staff on compliance around evolving ESG regulations.

Contact us to learn how we can help you with your ESG needs, grow your investments, and protect your firm.

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