Newly published research has brought a welcome investigation into the key ESG data supply chain challenges that rating providers and data aggregators (RPDAs) face.
The findings, published within the EDM Council’s “ESG Data Management: Rating Providers and Data Aggregators” report, is the second such report in the EDM Council’s ESG data research series, and offers insight and guidance on how RPDAs can deal with the sector’s pitfalls.
RPDAs are play an important role in collecting and analysing raw data from reporting entities, which is enabling firms to develop research, ratings, assessments, and comparisons of corporate performances related to the emerging global ESG goals and objectives.
The products and services provided by ESG RPDAs are an essential element of the ESG ecosystem, but are encountering their own set of data management and analytics challenges.
While usage of ESG products varies, the data supply chain for the RPDAs is essentially the same. The EDM Council’s report outlines a six-step RPDA product delivery process through which ESG data challenges were then assessed and prioritised.
The study then used these steps as a framework to identify eleven current priority challenges and then make strategic and tactical recommendations for each:
- Complexity of Standards Setting
- Model Governance
- Documenting data points to materiality
- ESG Metric Effectiveness
- Data Gaps
- Version Control
- Changes and Trends in Source Data
- Third-Party Data
- Scenarios and Models
- External Assurance of ESG Data
- ESG Data Management Requirements
Commenting on the findings, Eric Bigelsen, EDM Council Head of Industry Engagement and Head of the ESG Workgroup, said:
“As ESG has grown in prevalence, so have the data management challenges that Rating Providers and Data Aggregators have faced. Our goal with our latest ESG research is to simplify the ESG data supply chain and create a common framework within which these entities can operate.
’We aim to bring more clarity and understanding to this evolving sector while demonstrating the benefits of ESG in delivering sustainable outcomes,” Bigelsen added.
This EDM Council ESG Rating Providers and Data Aggregators report is the second instalment in a series of research papers detailing the findings of a nine-month study around ESG data challenges and recommendations. It follows the EDM Council’s November 2021 release of its ESG Corporate Reporting Best Practices report.
Through the collaboration of the ESG Workgroup, the research series incorporates input from data professionals across multiple industries, corporate sustainability reporting professionals, ESG subject matter experts, and other business leaders in an effort that spans over 80 participating organizations and over 150 professionals