State Street plans to bring together a “critical mass of asset managers” in September to drive consistency and comparability of climate data, as financial giants such as BlackRock and Allianz make similar moves in the ESG data space.
Patricia Hudson, Head of Executive Communications and Thought Leadership at State Street, said on a video conference hosted by the Institute for International Finance (IIF), that the pair would hold a workshop in September in a bid to bring together asset managers to agree on the key climate metrics, the methodologies they want companies to use to calculate those metrics, and how they want companies to report on them.
“At the moment the challenge is that there isn’t really a lot of consistency or comparability of the data and we have to quickly get to that stage,” said Hudson. “So that managers are asking companies to be reporting on the same things and that those results can be audited. That is a key issue to making progress.”
State Street Global Advisors has been thinking about ESG data as far back as 2011, with Chief Investment Officer Rick Lacaille leading efforts – initially via Project Delphi.
Hudson said State Street and BlackRock had already endorsed the Sustainability Accounting Standards Board materiality framework and the TCFD principles on climate reporting, which she described as “investor-led frameworks focusing on the value drivers for investors”.
Also speaking on the video conference, Barbara Novick, Vice Chairman and Co-founder of BlackRock noted that companies could get up to 50 ESG data requests a year.
“The proliferation of surveys leads to pretty low-quality data,” she said. “If they put effort in a few, the quality and consistency, we believe, goes up … If more people coalesce behind what they want it will be more likely issuers will embrace that.”
BlackRock has teamed up with Microsoft to offer grants to address the lack of standardised, high-quality data, which the firms say “remains a significant hurdle in understanding the impact of sustainability-related risk on investment portfolios and company performance”.
It comes as Allianz and S&P Global launch a project to address the lack of standardised and financially-material climate data, via an open-source platform called OS-Climate data, which has backing from big hitters such as former UN Climate Chief Christiana Figueres and Bob Litterman, ex-Head of Risk at Goldman Sachs.
And the Net-Zero Asset Owner Alliance, the $4trn UN-backed body co-founded by Allianz, has called on service providers to urgently converge on carbon neutral methodologies in a call for comment.