When Spotify was first launched, over a decade ago, it disrupted the music industry by drastically changing how artists released and promoted new music and how consumers interacted with art. Now, a new platform developed by the asset manager Arabesque aims to disrupt the world of sustainability in much the same way.
The platform, called ESG Book, is a central, digital source for sustainability and ESG information; companies can disclose and manage such information there for free, and users can access it without being charged until the analysis stage.
The ultimate goal, really, is to turn ESG information – ranging from emissions and green revenues data to ESG and temperature scores – into a public good. Daniel Klier, president of Arabesque, explains that “through this platform, we aim to shape the future of ESG data.”
Arabesque is not alone in its desire to propel sustainability systems forward. ESG Book was launched on December 1, 2021, by a number of heavy hitters across the worlds of international governance (like the United Nations Conference on Trade and Development and the Global Reporting Initiative) and finance (like Deutsche Bank and HSBC). The entire list of founding partners in the global alliance is available here. And already, more than 9,000 companies have uploaded data to the platform.
In pursuit of its goals, ESG Book adheres to five principles. First, it allows companies to “be custodians of their own data,” with control over maintaining and disclosing real-time sustainability information so that there can be more transparency and fewer errors than in a system dominated by annual reporting. Second, this enhanced transparency translates into “more meaningful reporting”: the direct connection between companies and their investors enables them to report on the issues about which stakeholders care or on which they request information, and thus helps them figure out where data gaps exist. Third, companies report their sustainability information clearly and consistently, so it is just as easily available, accessible, and comparable for every user, and so up-to-date information is guaranteed for the purpose of directing flows of capital. Fourth, the actual ESG data is “framework-neutral,” providing a level-playing field for users who may have become accustomed to one framework or another, making it comprehensive so stakeholders can find answers for several different frameworks all in one place, and enabling it to respond to market and regulatory changes quickly. On the flip side, ESG Book intends to ease “the regulatory burden” since the information housed there can be used by companies to disclose under multiple different frameworks, thus freeing up resources that otherwise would have been used for repetitive reporting processes and enhancing insights into the information contained in those reports. Essentially, investors benefit from more information and connection with companies, and companies benefit from a more streamlined data maintenance process over which they have more control.
Through these principles, Sanda Ojiambo, CEO and Executive Director of the UN Global Compact explains, ESG Book, “supports the strategic ambition of the UN Global Compact to accelerate and scale the global collective impact of business by upholding the Ten Principles and delivering the SDGs through accountable companies and ecosystems that enable change.”
The additional principles that Ojiambo refers to, the Ten Principles of the UN Global Compact, and the UN Global Compact itself, were developed to push companies to act more responsibly across fields such as human rights, labor, the environment, and anti-corruption, and to report on their progress.
The need for companies with lofty values seems obvious given the state of the world. And as more companies act sustainably and disclose data on those efforts, the need for a platform like ESG Book also becomes more necessary. Although more than $100 trillion in assets under management are committed to the UN-supported Principles for Responsible Investment (PRI), and Corbin Advisors found that nine out of ten investors around the world take ESG factors into account when making business decisions, the entire sector is still plagued by data that is not reported as often as it should be, and is often inconsistent or inaccessible when it is. Backstop Solutions Group even found that 72 percent of allocator professionals do not track ESG metrics for their private portfolios because of such issues. ESG Book is one step toward correcting this system, as Georg Kell, Chairman of Arabesque, explained in the press release: “It enables more comparable and higher quality ESG data, thereby advancing the mission of making markets more sustainable.”