About 62% of respondents struggled with the extent and quality of company-reported ESG data, says Bloomberg survey. While 26% found combining ESG data with alternative data was the second biggest challenge.
Additionally, managing multiple ESG vendor feeds posed a significant challenge for nearly one-third (31%) of respondents, a stark contrast to the 16% in Europe who identified this as a key issue.
The drivers and obstacles of adopting ESG data in China were revealed by a Bloomberg poll of more than 150 market participants from the banking, insurance, securities, and technology sectors who attended the Bloomberg Sustainable Finance Forum in Shanghai.
According to 25% of respondents, legal requirements were the main driver behind firms’ adoption of ESG data. The needs of both onshore and offshore clients (21%) and internal risk management (21%) came in close succession to this. These results demonstrate the various motivations for including ESG factors in investing strategies, which stem from both internal and external risk assessments.
Chinese market players are thoughtfully incorporating ESG factors into their decision-making processes in a variety of ways. Using third-party ratings, scores, or relevant research as a focal point (20%), impact investing (19%), Developing quantitative plans that take other financial factors into account in addition to ESG data (18%) and tackling biodiversity (9%) and climate risks (16%).
according to 35% of respondents, another major barrier was connecting ESG data to already-existing entity/instrument data. These difficulties show that, despite the increased interest in ESG data, standardization of ESG data reporting is still required to guarantee that financial market participants can take full advantage of this data.