ESG Phenomenon: SIX Group Survey
Among the findings was that a lack of data expertise from wealth managers could be why wealth managers prefer fundamental ESG ratings to raw ESG datasets – to limit the amount of analysis that they need to do.
Insufficient data and technology hobble asset and wealth managers ability to put ESG ideas into practice, according to a survey by Switzerland's SIX Group.
Some 143 global buy-side C-suite executives were surveyed. It found that 41 per cent of those surveyed said developingf ESG-related capabilities/offerings for clients was either important or critical to the way in which they ran their business. This contrasted with 15 per cent who do not recognise it as an important area.
However, both agreed that there are clear data and technology challenges when it comes to incorporating ESG effectively and consistently into the investing process, The most common gap in the market that was identified by asset managers was for raw/underlying ESG datasets to help them to effectively assess the ESG credentials of particular investments for themselves, rather than having to rely on supplied ratings, which can “vary wildly” from provider to provider, SIX said.
Wealth managers took a different stance, however – 45 per cent had a desire for fundamental, pre-packaged ESG ratings. This can possibly be explained by the fact that 26 per cent believed that the most in-demand services to help drive their business forward are data and analytics, and advanced quantitative skills – the most common responses. A lack of data expertise from wealth managers could be why they prefer fundamental ESG ratings to raw ESG datasets – to limit the amount of analysis that they need to do.
The findings come at a time when worries about "greenwashing" – making investments appear more "sustainable" than they are – has become a bugbear in the ESG space.
SIX operates the infrastructure for the Swiss financial centre.