ESG data – an emerging opportunity
AMR’s B2B information team believes that ESG is a substantial, growing market that is here to stay.
ESG adoption will remain a priority across the investment value chain, irrespective of market turmoil. With a fragmented supplier landscape and exit paths to industry players, we see ESG as an emerging opportunity for private equity.
What is the ESG data market?
Environmental, social, and governance factors (ESG) data is used to assess the sustainability and ethical conduct of a company.
Investors use ESG data to support ‘responsible investing’, an increasingly important aspect of investment strategy and portfolio composition and management.
Why is ESG data exciting?
Responsible investing is growing fast, fuelled by robust growth drivers:
- increased recognition from investors that ESG factors have a material impact on risk and return
- impending ESG regulation (e.g. amendments to MiFID II)
- customer preference for responsible investing amongst millennials
In line with this, global spend on ESG data across the investment value chain has been increasing rapidly
Who are the suppliers of ESG data?
The market for ESG data is split between bulge bracket full-service FS data providers (e.g. S&P, Moody’s, MSCI, Refinitiv, IHS Markit) and specialised ESG vendors.
The specialists include an ecosystem of relatively early stage fintechs using cutting edge data technologies to provide new ESG data points and analytics.
There have already been a number of exits as full-service providers seek to gain ESG capabilities to fulfil growing customer demand.
What is the private equity play?
To date, acquisitions have been led by trade buyers. Their primary goal has been to add capabilities and cross-sell.
AMR’s information team believe that as the ESG data market matures, private equity will develop a growing right to play and create value, whether through investment, buy-and-build, or a consortium-led approach.
AMR has built deep expertise across a range of information verticals. We have worked consistently with world-leading information groups for over 30 years providing strategy, development and transaction support. We have also supported 100 private equity funds.
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