Putting ESG Data to Work: Why Investment Firms Must Get Serious About ESG Integration.

As global efforts to combat climate change ramp up, the pressure on financial institutions to align with sustainability goals is rising fast. In Europe, this momentum is being driven by the European Green Deal and new ESG (Environmental, Social, Governance) regulations that are reshaping the way investment firms operate. Yet, as the whitepaper explains, integrating ESG data into everyday investment processes is far from straightforward.

To succeed in sustainable finance, investment managers need a structured, scalable approach to ESG data—one that goes far beyond spreadsheets and ratings. Let’s explore more. 

The ESG Challenge.

At the heart of the ESG movement is a major shift in how financial markets think about value. It's no longer just about returns—it's about resilience, risk, and long-term impact. This shift is being codified through binding regulations like:

• EU Taxonomy: Defines what counts as a sustainable economic activity.
  
  
• SFDR (Sustainable Finance Disclosure Regulation): Requires firms to disclose how they account for sustainability risks.
  
  
• CSRD (Corporate Sustainability Reporting Directive): Expands reporting obligations to include double materiality—how sustainability impacts the company and how the company impacts society.
  
  

These rules don’t just apply to public companies. They extend through the financial value chain, affecting asset managers, owners, and anyone responsible for investment reporting and risk management.

The ESG Data Problem.

The flood of ESG data now required is massive and messy. Firms must deal with:

• Company disclosures in different formats
  
  
• ESG ratings that often conflict
  
  
• Sentiment scores based on media analysis
  
  
• Diverse standards like SASB, TCFD, and PAI indicators
  
  

Much of this data is unstructured, inconsistent, or incomplete. Making sense of it—let alone using it effectively—requires a whole new level of data infrastructure. ESG information needs to be standardised to be able to roll up company-based data to portfolio-level information, track ESG criteria against third-party indices or to derive KPIs for internal and external reporting requirements.

Where the Industry Stands Today

Most investment firms are somewhere mid-journey in building ESG capabilities. Initial efforts often rely on quick fixes like Excel and custom databases. But those don't scale, especially with reporting obligations growing in scope and frequency.

What firms need is an operational backbone—a centralised, flexible system that can:

• Pull in and clean ESG data from various sources
  
  
• Standardise it across asset classes and entities
  
  
• Make it available across the organisation in a consistent, explainable way
  
  
• Support both internal analytics and external reporting
  
  

Who Owns the Data? A Governance Gap

Another challenge the whitepaper highlights is the lack of clear ESG data ownership. Effective ESG integration requires someone (or some team) to:

• Ensure data quality and completeness
  
  
• Manage relationships with ESG data vendors
  
  
• Oversee workflows across front, middle, and back office functions
  
  
• Handle compliance, licensing, and access controls
  
  

But because ESG cuts across so many functions, it’s often unclear where that responsibility should sit. Should there be a dedicated ESG data team, or should existing investment data teams take it on? The whitepaper argues for a clear, cross-functional governance framework either way.

The End Goal: From Raw Data to Investment Insight

Ultimately, ESG data isn’t just about checking regulatory boxes. Done right, it helps identify long-term risks and opportunities, giving firms an edge in both portfolio construction and client reporting.

A strong ESG data architecture enables:

• Scenario analysis and historical trend tracking
  
  
• Peer comparison and sector benchmarking
  
  
• Real-time insights across portfolios
  
  
• Transparency that builds trust with regulators and investors alike
  
  

Get the Foundation Right, Then Build Value

With sustainability now a core expectation—not a niche concern—the ability to handle ESG data is becoming a key differentiator. As the whitepaper makes clear, firms that invest early in solid ESG data systems and governance will be far better positioned to comply, compete, and lead in a greener financial world.

This transformation isn't optional. It’s a business imperative—and it starts with getting the data right.

When ready to take the next step, get in touch with Gresham’s Prime EDM solution for effective ESG data management.