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Is All that ESG Data Really Useful?

Updated: Nov 26, 2023

Sustainability is now front and center for companies and investors. This has led to a surge in requests for companies to disclose more ESG data. But is all that ESG data really useful? There are hundreds of ESG factors, varying in quality and usefulness, that are simply overwhelming to analyze. Let's take a moment to understand this issue from the perspective of both investors and companies.

Overwhelmed by ESG data: The Investor’s Plight

Imagine you’re in the shoes of an investor. ESG factors are becoming integrated into the investment process. You're eager to incorporate these into your analyses, but you find yourself facing a tidal wave of data. It's a daunting task, especially if you're new to the ESG field.

But the sheer volume of data isn't the only problem. You struggle with where to start, seeking answers to basic questions like what ESG topics to focus on and putting those into industry context. What’s more, you’d like to form an independent view, seeking to reduce reliance on scripted corporate narratives, and quickly realize the lack of usefulness of off-the-shelf ESG scores. It's frustrating because you end up spending hours toiling over the data, but it makes only incremental impact on your investment thesis.

ESG data can overwhelm investors

Feeling the Pressure: The Business Perspective

Now let's take the company’s perspective. Alongside the daily challenges of meeting targets, satisfying customers, and inspiring employees, there's now an intense spotlight on your ESG performance. As society and governments are becoming more conscious of climate change, you're expected to adapt quickly to new regulations, implement environment-friendly initiatives, and often make significant capital investments.

Layer on top the myriad of requests for ESG data from various groups, and it can feel like a steep hill to climb. Investors, regulators, and other stakeholders all want to see your ESG performance metrics. It can feel like you're being asked to divulge an unending stream of data, some of which might not even seem relevant to your business. It's costly, it's demanding, and it's confusing.

Potential Solutions

So, where do we go from here? It's clear that we need to find a way to more efficiently navigate the ESG data deluge, for businesses and investors alike. Here are some approaches that might help ease the burden:

  • Distilling What Matters: Let’s focus on the few ESG factors that truly matter for each industry. How do you synthesize what really matters? A good starting point is incorporating the ISSB’s SASB investment materiality framework that identifies the crucial industry-specific ESG metrics. But that’s just a starting point. Companies and investors need to overlay their own business insights and experience, to hone in on a few ESG KPIs that they believe move the needle. In this way, companies can feel that their ESG disclosures are genuinely meaningful, and investors can make informed decisions.

  • Visual Scorecards: Sometimes, we need to step back and look at the bigger picture. Visual representations of ESG performance can make complex data more digestible, providing a quick, easily understood snapshot of a company’s ESG position. It’s impossible for businesses to be perfect across the hundreds of possible ESG factors. But, a by-the-numbers visual of how a company compares to its industry peers, along a standardized assessment framework, can help avoid getting lost in the details by quantifying the areas of strengths, weaknesses and disclosure gaps. A picture truly can speak a thousand words.

  • Investor Interactions: Today, responsible investment (RI) teams conduct the majority of deep corporate engagements. The more impactful approaches also ensure investment teams are included in these dialogues. By bringing in the investment perspective, the financial materiality of ESG topics to the investment naturally surfaces.

a compass for sustainable investment

Investors are experts in financial and business analysis. They’re on the front-lines meeting companies frequently and poring over every detail of a company’s strategy and performance. While an RI team might be interested in a company’s carbon reduction programs, the investment analyst is interested in understanding how the company measures returns from those carbon reduction capital expenditures. The mind-meld of RI and investment teams results in a big leap forward towards more sustainable environmental & social outcomes and generating superior returns.

In today's dynamic environment, sustainability is assuming center stage for businesses and investors, bringing with it angst of data overload. However, amid this challenge lies the opportunity to achieve sustainable outcomes and value creation. By concentrating on crucial ESG factors, leveraging visual scorecards for clearer comprehension, and incorporating investment-centric dialogues in corporate engagements, we can steer through the deluge of data effectively.

At PortageBay, we're committed to guiding our clients through this intricate landscape. Curious to explore our innovative solutions to these problems? Reach out to us today to understand how PortageBay can transform your ESG journey at

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