ESG strategies have moved from an informal investment objective to a more complex requirement embedded in investment strategies. Yet most fund managers find dealing with their ESG assignments burdensome and time-consuming.
ESG is a long-term and essential framework for the sustainability of the economy. Integrating ESG represents an opportunity for the alternative investment industry to positively influence the performance of businesses.
Automation of ESG reporting
Investors are looking for ESG transparency. Hence, EU and non EU fund managers became subject to various new sustainability-related rules, by virtue of the EU’s Sustainable Finance Disclosure Regulation (SFDR). Over the coming months and years, other obligations will be imposed on managers both by the SFDR itself and investors. As a result, fund managers are under enormous pressure to find technology that helps them better monitor and report on ESG exposure at the portfolio level.
Alternative investment fund managers shuffle large data sets from different sources to generate their ESG reports. This process is costly and sometimes inefficient due to the lack of consistent, underlying data. Another challenge is to produce accurate reports to investors and to monitor change over time while navigating through complex compliance rules. In the absence of a standard way to measure, gather the data and report on ESG, aAlternative Investments Fund Managers have to implement the right solution to automate and simplify the process.
Whether managers are operating a single ESG fund or applying ESG criteria to their entire range of products, their operating model must include streamlined workflows and controls. Modelling and analysis tools allow portfolio managers to monitor, manage and track specific ESG measures relevant to their portfolios.
ESG factors will soon drive business decisions. In that context, technology plays a key role in improving the management of ESG reports and help companies to stay ahead of investors’ demands and competition.
DOMOS ESG Q® to generate investor or internal ESG reports in one click
Designed specifically for alternative assets (private equity, infrastructure, debt and real estate), the DOMOS ESG Q® solution automates ESG data collection, aggregation and reporting, using a bottom-up approach from asset level to a consolidated view at fund level.
The DOMOS ESG Q® scoring methodology is sector-specific and based on the SASB (Sustainability Accounting Standards Board) materiality matrix.
The Fundtech’s solution enables automated investor or internal ESG reporting in one click, SFDR compliant, both at fund and portfolio asset level. This platform provides non-listed Alternative Investment Fund Managers’ investors with a transparent and high value insight into the impact of their investments.
Article published in AGEFI Luxembourg in March 2022.