12th September 2023

Study with European institutional investors and wealth managers reveals role of ESG data in fixed income investing

New research from European ETF provider Tabula Investment Management, surveying 100 European institutional investors and wealth managers with combined assets under management of over E150bn, found that 98% say that ESG data is important to informing their fixed income investment decision-making with two thirds emphasising that it is very important
The research reveals that the majority of investors and wealth managers surveyed use more than one ESG data provider. Just over half said they use two providers; 11% use three; 2% use four.

When asked to rank what drives the decision to use ESG data providers to support fixed income investment decisions, respondents rated quality of rating methodologies as most important; ease of use (reporting, platforms) was second; geographical coverage third; and issuer coverage fourth.

In terms of the types of ESG data investors and wealth managers source from third-party providers:

-58% cited Sustainable Finance Disclosure Requirements, principal adverse impact and other regulatory reporting requirements information.
-More than half(55%) ask for ESG ratings while half of those surveyed seek raw corporate data disclosed by issuers such as emissions data and gender pay gap figures.
-46% say they look at business involvement screens, while 38% analyse data on climate risk and temperature scores.
-More than a third(36%) seek data on alignment with the Sustainable Development Goals and the same number source information on impact ratings.

Almost all those surveyed say that differences between providers’ ESG ratings for the same issuer make using that data a challenge. One-quarter say inconsistencies make it very challenging to use the data while 69% say it is quite challenging. Only 6% say that discrepancies between ESG ratings for the same issuer do not make ESG data use a challenge for fixed income investment decision making.