Simplifying ESG Portfolio Construction
Environmental, social, and governance (ESG) investing is becoming increasingly popular among global financial institutions and investors. Two major forces are behind the growing trend of ESG investing: subpar growth across the wealth management industry seeking alternative growth for assets under management (AUM), and investors’ desire to create a more positive social impact through their investment choices while receiving long-term financial returns. However, ESG data ratings lack standardization, quality, and audited and timely data. Tata Consultancy Services (TCS) aims to solve for the data quality issue by offering a bespoke ESG data integration framework that serves as a container for aggregating and reconciling third party data. The TCS ESG Integration Solution is designed to address the industry’s concerns around unclear data ratings and misaligned scoring correlations. Celent believes that the solution is differentiated from other offerings in the market by its ability to sanitize data from leading data providers. The solution also provides much-needed transparency across the ESG data ratings process, particularly during portfolio construction. ESG investing has increased in popularity over the last couple of years, driven by demand among financial institutions (FIs) and retail investors.