Publishing investment-grade ESG data more likely to attract investment, survey finds

Companies that collect, use and disclose ‘ESG “Investment Grade” data “can expect to be rewarded” on several fronts, according to a recent survey.

Benchmark ESG collected the opinions of 770 investment decision-makers on the challenges and opportunities associated with ESG investing and find that there is a significant advantage for companies that collect and offer genuinely useful ESG data – or “investment grade” ESG data, as the business.

The survey finds that approximately 85% of investors, including 91% of institutional investors, consider high-quality ESG data more important than other corporate data when making their investment decisions.

Disclosure of this data not only provides investors with the opportunity to assess future risks and opportunities for companies, but also serves to build confidence in management. Benchmark ESG reveals that 94% of respondents say they are more likely to invest in companies that produce, use and publish investment-grade ESG performance data than in those that do not. And 91% of respondents say they would trust the management team more at companies that successfully collect, use and disclose this data.

Yet, it appears that many companies are failing to produce the quality data investors expect: only 64% of respondents say ESG data produced by Fortune 500 companies meets their definition of “investment grade”. . Of the 39% of respondents who consider environmental data most important for their investment decisions, 80% say the quality of this data needs to be improved.

ESG data challenges

There are a number of challenges to producing better investment grade ESG data. Across the sample of 770 investment decision makers, nearly a third (32%) of respondents cite the “lack of digital technology and tools for collecting quality data” as the top hurdle companies face. face in the collection and use of investment grade ESG data.

The continued lack of standardized metrics and methods to measure and report investment-grade ESG data and the lack of relevant internal expertise to measure and report companies’ ESG performance are cited by 28% and 26% of respondents, respectively.

A quarter say they see a lack of cross-functional collaboration and proper ESG performance measurement and reporting workflows across companies, as well as a need for external services.