- Where disclosure and data exist, there tends to be record levels of sustainable investing.
- Financial products related to the Sustainable Development Goals can only be developed once fundamental data is available across companies.
- Environmental, Social and Governance (ESG) data should be treated as fundamental rather than alternative data.
Businesses today face significant environmental and social challenges that pose risks to their potential to sustain growth. At the same time, the regulatory landscape is evolving, new technologies are emerging faster than ever before, and customer behaviour is shifting.
Addressing these shifts in global markets presents a challenge for financial advisors and investors who are actively seeking places to invest their money that support their sustainable values. The difficulty for many investors, however, is a lack of disclosure by many firms.
Sustainable investment decisions require data, and where disclosure and data exist, there tends to be insight that leads to record investment. Nowhere is this more evident than in the first nine months of 2019, where investors allocated a record $89 billion into global green and sustainability-linked loans. Given that 90% of the world’s available data was created in the last two years, these sustainable considerations are likely to be at the heart of mainstream investing in the near future.
A recent report from Refinitiv – “A Deep Dive Into Environmental Metrics” – found that 63% of companies within Refinitiv’s Environmental Social Governance (ESG) database, which covers approximately 70% of the world’s market cap, have a policy to reduce emissions. This is up 56% from five years previously, showing a solid trend of companies committing to take their impact on the environment more seriously. However, only 35% of companies have specific reduction targets around their emissions, meaning many are setting up policies without backing up their intentions.