The ESG space has undergone a lot of change in the last few years, from the political battles over ESG investing in the US to the looming regulation of ESG ratings in the EU. But the underlying need for comprehensive, accurate, transparent, and comparable environmental, social, and governance (ESG) data — and particularly carbon and climate data — has only strengthened. Sustainability and procurement professionals need this data to assess their sustainability and climate risks, facilitate and use green finance, and comply with new sustainability reporting standards and frameworks.

As a result, the ESG data and analytics providers market is rapidly growing in scale, sophistication, and maturity. In our report, The ESG Data And Analytics Providers Landscape, Q2 2024, we scanned the global market and found 17 vendors serving a variety of use cases. In our recently published report, The Forrester Wave™: ESG Data And Analytics Providers, Q3 2024, we evaluated the most significant ESG data and analytics providers. The Wave report includes (in alphabetical order) the following vendors: Bloomberg, Clarity AI, EcoVadis, ESG Book, FactSet, ISS STOXX, London Stock Exchange Group, Moody’s, Morningstar, MSCI, RepRisk, and S&P Global. To help investment, sustainability, and risk professionals select the right one for their needs, the evaluation reveals how each provider measures up and what differentiates them in the market.

What Should Buyers Of ESG/Climate Data And Analytics Look For?

Whether you’re an asset manager, an ESG or climate finance executive working at a bank, or a procurement professional, your needs will vary depending on your role and mandate. You might need to identify ESG- and climate-related investment risks and opportunities, evaluate ESG- and climate-related risks in your supply chain or third-party ecosystem, or access external data to meet sustainability reporting obligations. You’ll have to select from a diverse set of providers that vary by size, type of offering, geography, and use case differentiation.

We recommend you look for providers that:

1. Keep expanding the breadth and depth of their ESG/climate data and analytics.

Procurement professionals should seek vendors that can help them identify and measure their supply chain’s scope 3 emissions. Investors should look for provision of granular ESG raw data feeds to power their proprietary ESG risk management models, tailored to their specific investment criteria and preferences. Additionally, buyers should look for providers that use emerging technology (e.g., satellite imagery or the internet of things) and/or partner with third parties (e.g., climate risk analytics providers) to collect and offer new types of data like physical and transition risk and biodiversity data. Assess whether they use AI capabilities (with a human in the loop) to automate and improve data collection, validation, standardization, and analysis; build modeling methods to construct and expand their datasets; and provide real-time and forward-looking data.

2. Enable tight data, system, and workflow integration.

Organizations often need to source data from multiple providers to meet their ESG and climate-risk data needs, but limited data interoperability and data standardization thwart any attempts to aggregate data. Buyers should look for providers that can help them build or connect to an enterprisewide centralized master data management repository that ingests, validates, reconciles, unifies, cross-references, and links the data — and that combines external and in-house data such as financial data. Buyers should seek vendors that offer a wide selection of integrations, including APIs, and that have a strong partner ecosystem to help them seamlessly access and integrate ESG and climate data into internal systems and existing workflows.

3. Offer data solutions aligned with regulatory standards and frameworks.

As the global regulatory landscape for sustainability reporting rapidly evolves, buyers should evaluate providers’ roadmaps and their ability to respond to those changes quickly. Forward-looking, flexible, and scalable data solutions can help firms anticipate and align their supplier risk management practices and investment portfolios with sustainability reporting frameworks and net-zero goals. They should also provide disclosure capabilities aligned with reporting initiatives such as the Corporate Sustainability Reporting Directive (CSRD), the Corporate Sustainability Due Diligence Directive (CSDDD), the EU taxonomy for sustainable activities, the International Financial Reporting Standards (IFRS), the European Banking Authority’s Pillar 3 disclosures, and the Sustainable Finance Disclosure Regulation (SFDR).

Forrester Can Help You Select The Right Partner(s)

If you’re a Forrester client, you can download the Wave report to see our evaluation of ESG data and analytics providers and use the brand-new interactive Wave experience to get customized vendor rankings based on the criteria that are most important to you. And if you’d like to discuss this topic further, please reach out through an inquiry or guidance session.

Many thanks to Lok Sze Sung for her help with this project.