Sat, Jan 23, 2021
A A A
Welcome Guest
Free Trial RSS
Get FREE trial access to our award winning publications
Alternative Market Briefing

ESG data market worth to reach $1bn in 2021

Wednesday, March 11, 2020

Laxman Pai, Opalesque Asia:

The market for environmental, social and governance (ESG) data could reach $1 billion by 2021, said a research report.

Opimas report 'ESG Data Market: No Stopping Its Rise Now', says that the market topped $617 million in 2019. The research group projects annual growth of 20%, and 35% growth for ESG indexes.

The report states that the bulk of the buying will come from Europe. Roughly 60% of demand will come from European firms, primarily due to regulations. Asset managers must incorporate ESG considerations into their fiduciary duties by the end of next year.

North American firms will comprise 33% of demand. Asian companies will represent the final 7% of demand.

The biggest buyers of ESG data are asset managers, at 59%, followed by sell-side institutions at 19%, asset owners at 12%, others, including consulting firms and investment advisers, at 6%, and corporates at 4%.

While ESG data providers are using more sources to make ESG data more timely and reliable, Axel Pierron, Opimas managing director, and report co-author said incomparable data pose a risk.

"The issue ahead is that the industry is likely to see a massive reallocation of portfolios toward companies that have better ESG ratings solely based on incomparable data. Investors will end up with stocks that are overpriced due to - at best - incomplete or outdated data," Pierron said.

Until now, the industry has mostly focused on a quantitative approach, particularly with the use of ESG ratings that attempt to transform qualitative information into hard numbers, said the report.

As ESG integration and the corollary need for granular data continue to grow, ESG data providers should consider adding a qualitative layer on top of their quantitative data.

"We expect financial analysts, notably within sell-side institutions, to embrace ESG criteria in their company reports as they certainly have a role to play in enriching quantitative information within their qualitative research," said the report.

Today's Exclusives Today's Other Voices More Exclusives
Previous Opalesque Exclusives                                  
More Other Voices
Previous Other Voices                                               
Access Alternative Market Briefing

 



  • Top Forwarded
  • Top Tracked
  • Top Searched
  1. SPACs: Jeremy Grantham: "SPACs should be illegal", Spacs may fuel European IPO boom, SPAC IPOs surge, The SPAC pop is now a thing: More unicorns getting on board, Paysafe readies $9bn IPO Via SPAC[more]

    Jeremy Grantham: "SPACs should be illegal" Special-purpose acquisition companies (SPACs) should be illegal, according to Jeremy Grantham, as they escape regulatory oversight and encourage the "most obscene type of investing." Grantham is the co-founder and chief investment strategi

  2. News Briefs: What if data scientists had licenses like lawyers?, Next generation behind family offices' ESG push[more]

    What if data scientists had licenses like lawyers? From Bloomberg: Data scientists, if they're poorly qualified or act irresponsibly, can do at least as much damage as lawyers and doctors. The algorithms they create can ruin lives, aggravate social divisions, even facilitate genocide.

  3. SPACs: SPAC costs are 'far higher' than previously realized, study finds, Jim Cramer recommends profit taking in speculative electric SPAC names.[more]

    SPAC costs are 'far higher' than previously realized, study finds From Institutional Investor: The costs of going public via a special-purpose acquisition company are both "opaque and far higher" than previously recognized, new research shows. SPAC shares tend to drop by one third or

  4. Institutional Investors: Pensions swamped in a sea of negative real rates, Bahrain's pension fund authority faces collapse[more]

    Pensions swamped in a sea of negative real rates From FA Mag: Defined-benefit pension plans were already barely treading water heading into 2020. In the years ahead, the risk is as great as ever that a large swath of them will drown. As the name implies, defined-benefit pensions promis

  5. New Launches: Lesser-known Tiger Seed launches long-only fund, Bill Gates-led fund raises another $1bn to invest in clean tech, Claret Capital strikes initial close for first fund since spinout from Harbert[more]

    Lesser-known Tiger Seed launches long-only fund From Institutional Investor: A hedge fund whose largest investor is Julian Robinson Jr.'s Tiger Management has launched a long-only fund as part of a larger reshuffling of its investment vehicles. Tiger Legatus Capital Management, a so-ca