Institutional investors still grapple to secure reliable and consistent data to support their sustainable investment strategies, particularly as they venture into private markets, research reveals.
The Morningstar Sustainalytics State of ESG Data Report 2025, which surveys 145 financial market participants including asset owners and asset managers, finds almost half (47 per cent) of respondents say gaps in sustainability-related data coverage across asset classes and geographies was their biggest pain point.
More than two-fifths (41 per cent) of investors identify poor data quality and 40 per cent point to inconsistent information as major challenges.
Jono Broome, Associate Director, Client Advisory, Morningstar Sustainalytics, says: “These challenges could be indicative of financial market participants focusing on ESG materiality and a total portfolio approach that ensures they have access to good quality and comparable data sets across asset classes.”
He adds: “As investors are increasingly required to disclose on the ESG and sustainability factors of issuers in their portfolios, access to standardised, quality data is key. For instance, ESG reporting standards, such as the Sustainability Accounting Standards Board or the Corporate Sustainability Reporting Directive, emphasise the use of publicly disclosed ESG data.”
Insufficient ESG data becomes more of a challenge for the burgeoning number of investors seeking allocations to private market asset classes.
When asked to select the five sustainability areas they thought had the best coverage and breadth, private markets fell far short of more traditional investment asset classes such as listed equity and fixed income.
Broome says: “As responsible investment practices around listed equity and fixed income have matured, ambitions have expanded into new asset classes. Investors are increasingly turning their attention to private equity, real assets and other alternatives to get a whole of portfolio view on sustainability. Given that ESG data availability has traditionally been limited among these frontier asset classes, this presents a new challenge for investors and research providers alike.”
Given the frustration with inconsistent data formats and reporting, the survey reveals growing demand from investors for improved integration.
Broome says “data delivery matters as much as content”, noting: “Investors value seamless APIs or bulk feeds, risk calculation engines and fund analysis tools to integrate ESG data into daily workflows. Effective ESG strategies now require embedded, not siloed, data solutions.”
