A recent Bloomberg survey conducted at the Bloomberg Sustainable Finance Forum in Shanghai has shed light on the key drivers and challenges of ESG (Environmental, Social, and Governance) data adoption among over 150 market participants from the banking, insurance, securities, and technology sectors in China. 

The survey revealed that a significant 62% of respondents struggle with the quality and coverage of ESG data, highlighting a major hurdle for companies aiming to meet increasing regulatory and investor demands. Managing multiple ESG vendor feeds is also a notable challenge for 31% of respondents, a stark contrast to the European experience, where only 16% reported this as a key issue. 

Regulatory requirements emerged as the top driver for ESG adoption, cited by 25% of respondents. This was followed closely by internal risk management (22%), and the demands of both onshore and offshore clients (21% each). These findings underscore the multifaceted pressures, both external and internal, pushing organizations towards embracing ESG data. 

Chinese market participants are integrating ESG data into their decision-making processes in various thoughtful ways. Key use-cases include focusing on third-party ratings and scores (20%), engaging in impact investing (19%), building quantitative strategies using ESG data (18%), and addressing climate risks (16%). Biodiversity concerns are also being considered, though to a lesser extent (9%). 

Linking ESG data to existing entity or instrument data poses another significant hurdle, with 35% of respondents indicating difficulties in this area. These challenges point to the need for standardized ESG data reporting to maximize its utility for financial market participants. 

Patricia Torres, Global Head of Sustainable Finance Solutions at Bloomberg, commented on the survey results: “There is a growing synergy between the demands of investors and regulatory drivers when it comes to the use of ESG data for Chinese market participants. Now, more than ever, firms building capacity to incorporate and manage ESG data as part of their investment decision-making processes will stand out. There is every indication that the role of ESG in China’s financial markets will continue to grow in importance over time.” 

 Sources: 

https://esgnews.com/bloomberg-survey-shows-62-of-chinese-firms-struggle-with-esg-data-quality-and-coverage/ 

https://www.bloomberg.com/company/press/bloomberg-survey-shows-chinese-firms-embedding-esg-into-investment-strategies/