ESG Data
What is ESG data?
ESG data is important extra financial information, not traditionally disclosed in standard financial reports. It is related to environmental, social and governance factors used to access the sustainability of companies and investments.
Who collects it?
ESG disclosures are compiled from a variety of sources. Including third party ESG rating agencies, company reports, regulatory filings, and sustainability reports.
The quantity and quality of ESG information has improved over recent years but it can still be difficult to make direct data comparisons.
There are a range of ESG reporting frameworks globally, that help provide some level of data standardisation. These include the IFRS Sustainability Disclosure Standards developed by the International Sustainability Standards Board (ISSB) with the goal of creating a unified set of global ESG disclosure standards, the SASB Standards developed by the Sustainability Accounting Standards Board containing specifications on disclosing financially material sustainability information across a range of industries, and the Task Force on Climate-related Financial Disclosures created by the Financial Stability Board to develop recommendations on the information that companies should publicly disclose about their financial risks related to climate change,
In practice, investors will use a range of frameworks and standards when incorporating ESG data into their analysis.
In the UK the FCA is gradually rolling out its Sustainability Disclosure Requirements and associated anti-greenwashing regulation, which seeks to improve communication around sustainability information to investors, and tackle greenwashing where it occurs within the industry.
Why is ESG reporting important?
Investors and consumers are placing increased emphasis on the sustainability of companies, requiring the reporting on environmental, social and governance activities. These disclosures can be used to evaluate the investment risks and opportunities of companies. In conjunction with financial reporting, its provides a more rounded picture of financial resilience. This in turn helps financial professionals and investors make better informed investment decisions.
Download our ESG Data infographic
ESG information is extra financial, and helps provide a more rounded picture of the long term resilience of companies. Download our infographic to find out more.