Sustainable Finance regulations in force in the EU and the rest of the world now require many financial institutions to adopt ESG objectives and disclose ESG performance indicators as part of the fiduciary duty of investment managers and financial advisors.

In addition to this critical regulatory driver, public market data in recent years clearly demonstrates that companies with strong ESG scores tend to be more competitive and generate higher returns. Financial sector actors, including private equity and venture capital fund managers and family offices, have also found that ESG factors help to improve the risk/return profile of their investments. These same entities have found that applying ESG criteria to assess risks and opportunities across their portfolios is challenging in the absence of clear ESG indicators and simple tools to document and share ESG data.

Banks are also increasingly using ESG criteria to assess risk and screen their corporate clients. Data collection and processing is fundamental in this context to ensure accurate and standardized data that can be used to compare the performance of entities within each sector. Sophisticated financial sector entities have been first movers in adopting ESG, but many face challenges in ensuring their clients and portfolio companies can meet the same reporting standards.