BREAKOUT B: Broad ESG Data
Rapporteur: Leah Yablonka
- Deborah Spalding, Managing Director & Investment Officer, Commonfund
- Elyse Douglas, Senior Research Scholar, NYU Center for Sustainable Business
- Todd Cort, Center for Business and the Environment at Yale
- Amy Springsteel, Director of Corporate Responsibility, Voya Financial
Broad ESG Data, a breakout session moderated by Deborah Spalding of Commonfund, exposed a disconnect between the creators and consumers of ESG data. The lively discussion engaged individuals across industries and roles, questioning the expectations of data-reporting corporations, the rating methodology of data providers, and ESG data usage by investors.
New York University’s Elyse Douglas opened the session by summarizing her paper that reviewed the current state of ESG data providers. Her analysis revealed two central findings: 1) all data providers are facing data quality issues due to a lack of reporting standards, and 2) data providers struggle to create credibility because of the proprietary rating models that lack transparency and standardization.
Todd Cort of the Yale Initiative on Sustainable Finance spoke to his meta-analysis which identified methodology and application gaps of ESG data. Though there is a trend in ESG factors suggesting higher financial performance, there is insufficient data to prove a statistically rigorous correlation of positive effect. Cort also argued that ESG data should not be standardized, but the industry should employ baselines for quality and methodological standard of reporting.
The final panelist from Voya Financial, Amy Springsteel, shared that the impetus behind her paper was to explain how data is collected, distributed, and disclosed with the analyst community. Ratings and rankings from ESG data providers often do not provide the full picture to the analyst community, creating a gap that needs to be filled with other sources of information and data.
Throughout the discussion, there was frequent disagreement between the various parties involved. The key areas of discussion were:
- The definition of data versus information, and the role of each in decision-making;
- The validity of ESG ratings after deeper analysis of the self-reported data feeding into rating bodies; and
- The quality of ESG data and its usefulness compared to traditional performance metrics used by investors.