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Access to Reliable, Standardized Data Remains a Major Hurdle to ESG Investments in Japan

Bloomberg poll with buy-side participants show a shift towards long-term returns as a driver for ESG investing


A poll conducted at the recent Bloomberg Japan Buy-side Summit revealed that there remain major obstacles to efficient and reliable Environmental, Social and Governance (ESG) data to accelerate ESG investing. The survey was conducted on the first day of the annual Bloomberg Buy-side Forum 2020 Tokyo, where Shinjirō Koizumi, Japan’s Minister of the Environment, delivered a keynote speech on redesigning the economic system. Over 680 buy-side executives from 11 countries participated in the forum, including investment professionals, portfolio managers, analysts, and strategists in asset management.

Based on the poll, approximately 45% of respondents cited “the pursuit of long-term returns” as their motivation for implementing ESG investments, which they selected over ESG as a risk management tool.

The most commonly cited obstacle when implementing ESG investment was “access to reliable, standardized data” (approx. 59 percent), followed by “the acquisition of analytical skills” (approx. 51 percent) and “establishing an investment framework or standards” (approx. 48 percent).

The survey also showed that the most practiced form of ESG investment is “ESG integration” (approx. 60 percent), followed by “engagement/shareholder action” (approx. 51 percent). This contrasts with a 2018 survey from Global Sustainable Investment Alliance in which the majority of respondents said that Japan’s most important investment strategy then was “corporate engagement and shareholder action.”

When asked which aspect of ESG – Environmental, Social, or Governance – was the most challenging to analyze, the most popular answer was Social. However, Governance was not far behind for the respondents.

“It has been 14 years since the start of ESG investment when the United Nations launched PRI (Principles for Responsible Investment),” said Kuni Ishibashi, Head of Japan at Bloomberg. “The results show that things are moving in a positive direction, but the lack of access to comprehensive, reliable data and common frameworks are gaps that need to be addressed to accelerate ESG investing. Bloomberg was founded on the principle that access to data brings greater transparency to capital markets, and that is why we recently launched our own ESG scores and will continue to play a role with the Task Force on Climate-related Financial Disclosure (TCFD) to help inform the markets of the financial impacts of climate change.”

Click here (Japanese only) for the survey report from Bloomberg’s Buy-side Forum 2020 Tokyo and find out more about Bloomberg’s ESG data offerings here.

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