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Abstract
The demand- and technology-driven development in the market for ESG-databases has led to consolidation and oligopolisation. Fund managers expect their provider to be able to analyse as many companies as possible, to update their data continuously and to make the insights gained available just-in-time. Therefore new providers have a hard time competing with the established, large providers. In this article we give you an overview of the largest ESG databases, the number of companies they cover, the characteristics of their rating or score and the frequency of determination.
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Introduction
Sustainable investments have been in vogue in recent years. In the meantime, they are a matter of course for almost every institutional and private investor. For example, in Q1 2022 alone, the assets invested in mutual funds with sustainability features in Germany rose to 563 billion euros, which corresponds to an increase of 80% over the year.
As a result, a market for specialised ESG database providers established itself years ago alongside the classic rating agencies such as Moodys, Fitch Ratings or Standard and Poor’s (S&P). They collect environmental, financial and non-financial indicators and process them using their own methodology.
In this context, ESG database providers have also extended their data collection to unlisted and closed market companies. They now provide data for tens of thousands of companies. By using modern technology such as machine learning or artificial intelligence as well as automated evaluations, they manage this almost unbelievable amount of data.
On average, institutional investors use three to six different ESG databases and spend $1.3 million annually on ESG data alone. This leads to a lot of positive effects. The figures show that large companies are acting more and more sustainably.
Barriers to Market Entry
Therefore if a larger investor wants to implement a new ESG investment concept, it is part of the standard process to select a suitable data provider.
Fund managers expect their provider to be able to analyse as many companies as possible, to update their data continuously and to make the insights gained available just-in-time via their web application or APIs.
The entry barriers for new providers are accordingly high. They have a hard time competing with the established, large providers. The demand- and technology-driven development has led to consolidation and oligopolisation.
Market Overview
The following is an overview of the largest ESG databases, the number of companies they cover, the characteristics of their rating or score and the frequency of determination:
- Truevalue Labs — 73.000 Companies — ESG Score: 0–100 — daily,
- Bloomberg — 11.800 Companies — ESG-Rating: AAA-CCC — daily,
- Sustainalytics — 40.000 Companies — ESG-Risk: 0–40 — ad hoc,
- MSCI — 14.000 Companies — ESG-Rating: AAA-CCC — weekly,
- FTSE Russell — 6.000 Companies — ESG-Rating: 0–5 — ad hoc,
- Sustainable Fitch — 10.000 Companies — ESG-Rating: 1–5 — not specified,
- RepRisk — 200.000 Companies — ESG-Rating: AAA-D — weekly,
- Clarity AI — 50.000 Companies — ESG-Score: 1–100 — daily,
- Scope Group — 40.000 Companies — ESG-Rating: AAA-C — annually,
- Imug-Rating — 10.000 Companies — ESG-Score: 0–100 — daily,
- Covalence — 13.000 Companies — ESG-Rating: 0–100 — monthly,
- esgbook — 25.000 Companies — ESG-Score: 0–100 — variable,
- S&P Global — 22.000 Companies — ESG-Score: 0–100 — ad hoc,
- CRS HUB — 50.000 Companies — ESG-Score: 0–100 — quarterly,
- SIX — 15.000 Companies — variable — ad hoc.
Please note that the providers usually offer different databases with different content specialisations and measurement methodologies. Therefore, the number of companies covered, as well as the frequency of determination, may vary across different products. The overview provides therefore no general comparability of the providers and is only intended to give an overall impression about the ESG database market.
