A study by Northern Trust shows that using ESG data is the top challenge for sustainable investing among institutional investors.

The Northern Trust report, “ESG’s Imprint on Institutional Investing”, offers insights into how institutional investors plan to navigate the challenges presented by a growing ESG environment.

When asked about the top challenges in incorporating ESG into their investment process, both asset managers (89%) and asset owners (79%) identified “collecting and analyzing data” as a top challenge. Similarly, both asset managers (82%) and asset owners (77%) identified “securing and normalizing sustainable investing data” as a key challenge.

The study found that while most asset owners and managers are prioritizing ESG initiatives, various complexities remain. When asked what their greatest ESG needs are for their investing practices, asset managers (76%) cited internal reporting and data, with nearly half of surveyed asset owners (40%) sharing this notion.

“This study shows that ESG is a top priority for institutional investors, but a dearth of standardized data on sustainability makes implementation difficult,” said Paul Fahey, head of Investment Data Science (IDS) at Northern Trust. “Digital innovation is transforming the investment landscape and advances in data science can be a key development in helping asset owners and managers make sense of increasing volumes of data across the ESG spectrum.”