September 1, 2023

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Asset Managers Increase Spending for ESG Data While Opponents Push Back on ESG Practices

Such is the state of the anti-ESG movement as we enter Fall 2023: The State of Florida’s legislature recently passed, and Governor DeSantis signed, an “anti-ESG” law that they hope will ensure Florida’s position as the “standard bearer” for the anti-ESG crowd.

 

This new law requires the state’s public employee pension fund to make investments based on “pecuniary” factors, meaning relating to money, and (in theory) not take into consideration ESG factors. Florida’s pension fund has AUM of $180 billion, and with related state funds covered by the law the total is $230 billion.

 

Unfortunately, this law could become a model for other Republican-controlled state legislatures. There is more information for you in one of our Top Stories from the Harvard Law School Forum on Corporate Governance. Passage of the Florida law gives other states examples of actions to make political points with their local anti-ESG and anti-woke crowd.

 

Meanwhile, as these anti-ESG actions occur in Red states, what are the views of institutional investors about ESG – the asset managers entrusted to safely manage trillions of dollars? To find out, the Bloomberg organization teamed with Adox Research (London) to survey executives managing money.

 

The researchers asked institutional portfolio managers, climate risk analysts, and data management executives about their reliance on key ESG data in investment decision-making. Fact: spending levels for ESG data in 2023 were rising. 92 percent of respondents said ESG data expenditures are increasing by at least 10%…with a small number of respondents increasing their ESG data spending by 50% or more.

 

The influential money managers surveyed said that ESG benchmarks and indexes, corporate disclosed ESG data, ESG scores and ratings assigned to firms, and “sustainable debt” (fixed income) are priorities in 2023 for their firms. The reasons why included the need to keep up with peer organizations, establish competitive practices, and to meet increasing regulatory requirements. More than 99% of respondents said their organizations value the importance of ESG data to achieve competitive advantage.

 

The encouraging survey results will be read by thousands of the respondents’ peers, with the results highlighted in Pensions & Investments, the must-read for public sector and corporate pension fund managers, asset/money management execs, portfolio managers, and other key players in the institutional investment community.

 

Conclusion: The use of ESG data is definitely mainstream for asset managers in 2023. Said Leila Sadiq, Global Head of Enterprise Data Content at Bloomberg in the news release announcing survey results: “Once categorized as an alternative data source, ESG data has quickly become integral to the value financial firms deliver to their clients. Executives are making significant strategic investments in ESG data acquisition and management to differentiate themselves and meet client and regulatory demand.” Bloomberg is a leader in providing investors with access to ESG data for more than 15,000 companies, and almost 500,000 active securities, which is instantly accessed on the Bloomberg Terminal.

 

The G&A team looks forward to keeping you updated on trends in ESG and sustainability reporting and the continuing attempts by some states to politicize what has clearly become a best practice for asset managers and corporations.

 

NOTE: About Pensions & Investments: the link to the news report about the Bloomberg survey is in our Top Stories this week. You can sign up to receive free newsletters at the link in the story, and if you wish, sample the publication for a brief period of time as well. P&I has been chronicling institutional investor market developments for 50 years, with readers including executives in asset management firms, hedge funds, corporate and public employee pension systems, insurance companies, and many related organizations.

 

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