Reliable data is needed to strengthen the foundation for ESG and impact investing

OVER the last decade, investors have increasingly turned their focus to environmental, social and governance (ESG) considerations to tap new opportunities and manage risks. Morningstar recently reported that assets under management in funds that abide by ESG principles surpassed US$1 trillion for the first time on record. Not only have ESG and impact investments proven to generate financial returns, they have also remained resilient amid the Covid-19 crisis, shining a light on the importance and resilience of socially responsible businesses and increasing their appeal to investors.

This is an encouraging trend, but we have a long road ahead before we see ESG considerations become commonplace in business and investment decision-making. One barrier to greater ESG and impact investing is a lack of the reliable data and metrics that investors need in order to understand issues and measure the effectiveness of solutions. What this means is despite more businesses and entrepreneurs creating innovative solutions that have the potential for widescale impact, progress is slowed by inconsistencies and gaps in data, which is critical to strengthen the case for investment.

Consistent data critical for investment