High-quality ESG data have become a game-changer for institutional investors. Institutional investors now treat data as the engine of every sustainable investment decision, not merely as a compliance checklist.
For instance, Pension Funds leveraged granular ESG scoring or emissions data to rebalance their portfolio, reducing exposure to high-carbon sectors and aligning with the EU’s Sustainable Finance Disclosure Regulation (SFDR). Such data-driven decisions not only clarify asset allocation across public and private markets but also ensure compliance with diverse regulatory frameworks in regions like the EU, UK, and Australia.
Today, ESG data is used not just for transparency, but as a foundation for actionable insights. More and more data management solutions, like BNP Paribas’ Data PRISM360, integrate ESG metrics directly into portfolio risk analysis, enabling CIO and Data Office to adjust strategies based on climate risk scores and impact indicators.
Data – the cornerstone of sustainable investment strategies
Data plays a crucial role in sustainable investment strategies, enabling investors to identify opportunities and risks before making any decisions.
Asset diversification—especially into infrastructure and unlisted markets—adds complexity for managers seeking comprehensive portfolio oversight. High-quality data is essential to provide the transparency they need. At the same time, institutional investors increasingly rely on ESG and risk metrics, including carbon emissions and environmental footprints, to guide their investment decisions. To be effective, data must reflect interdependencies and synergies—for example, how an energy transition strategy affects local communities. This requires a broader range of data types to track progress toward ESG objectives and proactively manage associated risks.
Such demand echoes with the results of our latest ESG survey, which reveals that institutional investors plan to allocate more effort to ESG data acquisition and analysing, reporting, impact measurement and disclosure, as well as hiring specialised ESG talent
observes Rémi Toucheboeuf, Head of Investment Analytics and Data Services at BNP Paribas’ Securities Services business.
“Investors require timely, transparent, and actionable data. In 2024, we partnered with NeoXam to develop Data PRISM360 solution. Our data management service enabled asset owners, such as UniSuper, to consolidate ESG data, providing a unified dashboard for monitoring carbon intensity and climate risks across global portfolios.”, he adds.
While data fragmentation remains a major challenge, investors also struggle with issues of data reliability and accuracy, making it difficult to access and analyse the insights they need. In response, many are developing proprietary data frameworks or leveraging third-party platforms to better support their sustainable investment strategies.
Comply, measure and mitigate risk – a data-driven issue
Regulatory bodies are setting new standards for ESG data. The EU’s Corporate Sustainability Reporting Directive (CSRD) now mandates detailed climate risk disclosures, while the UK’s Sustainability Disclosure Requirements (SDR) require asset managers to report on biodiversity and social factors. In response, Australian superannuation funds have adopted climate scenario analysis to comply with APRA’s Prudential Practice Guide.
However, the shift from voluntary ESG disclosures to mandatory reporting has also created a complex challenge for investors who must comply with the various regulations and reporting.
Beyond compliance, ESG investment monitoring and reporting are key for risk management policy – not only reputational damage but also financial losses. As such, assessing climate risk in investment decisions has emerged as an important new risk factor, impacting carbon-efficient investment strategies and portfolio decarbonisation, or voting policies.
Collaboration for better data to support the sustainable journey
Cross-industry collaboration is driving progress. For example, the Partnership for Carbon Accounting Financials (PCAF) brings together banks, asset owners and asset managers to standardise carbon accounting, while the International Sustainability Standards Board (ISSB) is fostering global alignment on climate risk reporting.
Institutional investors are increasingly looking for partners to help navigate the transition journey and drive sustainable change. By working together, investors, data providers, NGOs, and regulators can create a more robust and effective data ecosystem, supporting the growth of sustainable investing
How we can help
To support institutional investors with their data, our Data PRISM360 by BNP Paribas Securities Services’ business provides a holistic, standardised view of the portfolios across different asset classes and multiple datasets to help clients make more accurate and informed investment decisions.
We can support institutional investors in their ESG commitments and investment objectives with our outsourced ESG compliance monitoring solution.
Securities Services can assist institutional clients to assess climate risk. Our stress test solutions are an extension of our risk analytics offer where we embedded climate stress test features.
Conclusion
Robust data infrastructure is essential for ESG integration and impact measurement. Leading investors have built proprietary ESG data frameworks, enabling them to set science-based targets and transparently report progress to stakeholders.
Institutional investors require tools, expertise, reliable sources, and common definitions, alongside collaborations and partnerships, to drive their sustainable investment strategies and achieve meaningful outcomes. By accessing the right data, investors can make informed decisions, mitigate risk and drive positive outcomes.
As the demand for sustainable investing continues to grow, the importance of high-quality data will only increase, driving innovation and progress in the industry.
Rémi concludes.