Data management in focus for EU ESG reporting

Posted on March 17, 2024 by Editor

Investors in Europe are facing significant hurdles in managing environmental, social, and governance (ESG) data, according to a recent survey from Bloomberg. The European ESG Data Trends Survey 2024, drawing responses from over 200 financial market participants across major European cities, underscores challenges surrounding ESG data coverage, quality and volume.

A staggering 63% of respondents cite concerns about the coverage and quality of reported ESG data. This challenge is exacerbated by the necessity to integrate ESG metrics with alternative data sources, a hurdle for 13% of those surveyed. The impending Corporate Sustainable Reporting Directive (CSRD) is set to increase the volume and complexity of ESG data, and – with mandatory, standardised, and independently assured digital reporting a part of proceedings – quality should improve dramatically.

The survey also revealed divergent approaches to ESG data management, with many firms (20%) still deciding how to handle ESG data. Over a third (38%) manage their ESG data centrally with a proprietary solution, while 32% still rely on decentralised models. Mandatory, standardised reporting requirements – especially where assurance is involved – mean that data quality, oversight, and therefore internal management all need to be kicked up a notch.

Nadia Humphreys, Bloomberg’s Head of Sustainable Finance Data Solutions, emphasised the importance of effective data management in ESG reporting, stating, “If firms cannot organise their ESG data, they cannot effectively make decisions using that information.” On the flip side, if firms manage data effectively, it is much easier for the data to not only meet regulatory requirements but also feed into internal decision making.

As regulatory requirements like the CSRD take effect, enhancing ESG data-management practices becomes imperative. With digital reporting on the near horizon, we would caution firms to take the needs of digital data into account while setting up data management processes, to ensure their internal processes are future-proof and as effective as possible.

Read the survey results here.

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