ESG data strategy: Emerging initiatives and lessons learned from the leading institutions

Addressing ESG & sustainability objectives and building a sustainable financial system requires a solid ESG information architecture based on high-quality, reliable and comparable data.

However, the lack, transparency and costs of ESG data can be significant challenges preventing firms and banks from properly performing their sustainability, ESG and climate related activities. Some data just does not exist yet, some is difficult to trust and some is just too difficult to get. And these challenges are often rather segment specific; whereas corporate sector data is becoming more common thanks to the upcoming ESG disclosures, the data for SME and retail segments are more problematic. 

Nevertheless, the disclosure requirements and regulators are pushing banks to move ahead despite this lack of data, and thus banks often have to rely on imputing the missing information using proxies expert, judgements and models, and thus make decisions based on incomplete data.

“While there are risks to acting on the basis of partial climate risk data, the risks of inaction are greater,” saidFrank Elderson, Vice Chair of the Supervisory Board of European Central Bank