Factors fueling demand for ESG investment data

ESG investing is a term often used interchangeably with similar terms like sustainable investing, mission-based investing, screening, or socially responsible investing. In layman’s terms, this type of investing looks beyond the financial aspects of investment decisions and takes ESG (Environmental, Social, Governance) factors into consideration during the decision-making process.

Within the continuously evolving investment landscape, investors are faced with tougher challenges and greater risks that they need to consider when choosing where and what to invest in. ESG investment data assists with these decisions, providing transparency into the operations, employee wellbeing, and other facets of organizations that are under increased scrutiny. These perspectives provide new ways of understanding and overcoming challenges with a variety of strategies and factors.

When using ESG data to influence investment decisions, many factors are taken into account for each aspect of ESG. Below are just a few for each:

• Environmental: Carbon emissions, water stress, natural capital, renewable energy, green building practices, environmental impact, climate change
• Social: Privacy guarantees, data security, human capital, stakeholder opposition, product liability, labor standards, employee health & wellbeing
• Governance: Accountability, corruption, business ethics, board/leadership, fair pay practices, ownership, diversity, equity, & inclusion (DE&I)

Different types of companies will have different opportunities and risks, and no two ESG strategies will turn out the same. There tends to be a strong correlation between industry leadership and stronger financial yield and having an ESG strategy.

Here are four factors that are fueling the growing demand for ESG investment data:

Everyday evolution

Challenges to our global sustainability, such as natural disasters, privacy concerns, and data security, are presenting new, constantly changing risk factors for investors that have never been seen before. As globalization becomes increasingly standard and businesses are facing these challenges on a global scale, investors have been forced to reevaluate their traditional investment strategies to accommodate the changing times. Resilience has become a recurring theme that is top of mind for many executives.

A new generation of investors

Millennials have begun to enter the investment landscape in force, and this influx is anticipated to put between $15 and $20 trillion into U.S.-based ESG investments over the next 20 to 30 years; this has the potential to double the size of the U.S. equity market.

Millennials are going to be looking to gain more from their investments than investors from other generations. In a study done by Morgan Stanley, 84% of millennials are interested in sustainable investing. Millennials generally also want to feel a stronger connection to their investments, preferably tied to mission-based organizations and assets.

Altered analytics

Advances in technology and analytics capabilities have enabled companies to receive and provide better ESG investment data than ever before. This new access and transparency, combined with modern ESG research and technology, offers a more quantitative, objective, systematic, and financially relevant approach to ESG issues, strategies, and investments. Advancements in data analytics and reporting have created new opportunities and posed new questions for numerous reports and studies that explore the depths of ESG investing.

ESG equals ROI

Many investors are now incorporating ESG factors into their investment decisions because it has been proven to improve long-term return and lower the risk of investments. Investors are also aligning their investments with their personal values, such as religious, ethical, and political views. Increasing use of ESG data to improve the investment process is boosting more than just financial returns; it also helps generate positive environmental and social outcomes.

Our goal at Goby is to maximize the value of our users’ portfolios with the power of analytics and ESG best practices. We are focused on supporting commercial real estate and investment management organizations in achieving dramatic financial and environmental results through a pragmatic and disciplined approach to ESG.

ESG materiality assessments

With investors inquiring more and more frequently about what your company is doing in regard to responsible investment, how you treat employees and vendors, your dedication to sustainability initiatives, and other activities that fall under the ESG umbrella, it’s important to have answers to these questions.

An ESG materiality assessment empowers you to easily report on your current state and outline future initiatives while taking into consideration your business goals and risks. Download our guide to creating and extracting the maximum strategic value from an ESG materiality assessment.

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Helee Lev

Helee joined our team in 2012, overseeing strategic account management, new business, and industry alliances. In 2015, she participated in raising $5M of venture capital funding. She leads sales, business development, and Conservice ESG's strategic consulting group.

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