BlackRock global alts head: ‘Quality of ESG data is a challenge’

Coverage, frequency and consistency are key challenges, BlackRock Alternative Specialists' David Lomas told PEI's Responsible Investment Forum on Wednesday.

The quality of ESG data collected by private equity participants remains a key issue, according to BlackRock‘s global head of sales and marketing for alternatives.

The reliability and consistency of this data is questionable as it is largely self-reported, David Lomas, who leads the asset manager’s alternatives specialists group, told delegates at PEI‘s Responsible Investment Forum 2019 in London on Wednesday.

“We need some acceptable, consistent standards of reporting of the data, which means we are able to compare and combine insights across providers,” Lomas said. “If we don’t do that it will limit the ability to harness all this data.”

Consistency and frequency are also big challenges, he added.

“The amount of ESG data generated is significant and will continue to grow. On consistency, different index providers and organisations weight ESG differently,” Lomas said. “It’s really hard to get scale and comparable definitions, which makes life very difficult.”

The world’s largest asset manager has doubled down on sustainability investing. In the last 12 months the firm has completed requests for proposals with an ESG focus worth at least $100 billion in total. Of these 10 percent are focused on impact, 20 percent require explicit ESG integration process and 70 percent require extensive ESG diligence, Lomas said.

BlackRock conducted more than 1,400 LP meetings on ESG during the same period.

“There’s a wealth of untapped data and resources that would provide great information advancement for GPs – there is value-add there in this space; you just got to learn to harness it, measure it, manage it and report it.”

PEI’s Responsible Investment Forum Europe 2019 continues until Thursday. Find details on speakers, attendees and the agenda here.