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A "whole of market" view on the different ESG solutions

DM ESG Insights: what are we seeing?

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We are looking forward to launching our DM ESG Insights platform on 15th September 2022 at the ESG Investment Leader Summit, hosted by Clear Path Analysis.


What is the DM ESG Insights platform?

Our platform consolidates our market research on many ESG Data/Ratings and ESG Financial Technology solutions and structures the output into understandable and comparable information. This enables investment managers to efficiently identify solutions that complement their investment process better.

DM ESG Insights goes beyond helping you fulfil your due diligence needs, as it allows you to track and demonstrate your decision making towards short-listing, and selecting ESG partners, thereby meeting your regulatory and own governance purposes.

The platform provides benchmarking analytics allowing users to evaluate service providers and their solutions, which is key for assessing value for services acquired. It provides a robust audit trail and offers teams the ability to collaborate and share analysis of the ESG market. With a strong reporting and vendor assessment framework - which will be useful for both ESG focused teams, operational teams, and boards alike - it highlights key areas of attention when you are designing or amending your risk framework to include relevant ESG information or system deficiencies.

So, what are the initial insights we have learned from DM ESG Insights?

  1. The core solutions offered across all vendors are similar. For example, most vendors offer ESG Data, Compliance, and reporting capability, however there are significant differences to the extent at which these are offered. How do ensure you are getting the solutions capabilities you are after?
  2. Solutions such as Stewardship are not a popular offering amongst vendors although they are provided by both ESG Data/Ratings and ESG Financial Technology firms in different forms. This is a key focus area for managers that pride themselves in active management. What type of investment manager are you, and how do you measure performance of your Stewardship responsibilities?
  3. The Alternatives solutions are still in their infancy with less than half the vendors we have researched offering data for alternative asset classes, such as Real Estate and Private Markets. The limited supply of Alternatives solutions means that investment managers will really need to understand how alternatives information is provided. What due diligence have you done on vendors providing Alternatives Data?
  4. Only a handful of vendors offer peer group fund analysis. We are keeping track on how these solutions evolve in this market. The current market is characterised by movement in sustainability classification of funds which impacts the peer group. How comfortable are you that your peer group is appropriate?

It remains key for investment managers to understand how these solutions are delivered. Many of the vendors follow different approaches, which may cater to certain asset classes or investment approaches better, and some offer a ”consensus view” achieved from an average of multiple vendors. Utilising market consensus ESG scores can be useful for tracker funds, for use as proxies, or where a firm believes that utilising such scores, provides an unbiased view of ESG metrics. It is therefore key for investment managers to understand the different solutions in the market so they can identify and integrate solutions that complement their investment process better.

We would be delighted to provide a demonstration of our DM ESG Insights platform and show you how you can efficiently navigate the ESG vendor market and deliver effective solutions that complement your investment process, products, and governance.

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About the author

Simba Mamboininga

Managing Partner

Delivering a 360° service to the asset management industry

Devlin Mambo

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