About one-third of the world’s professionally managed assets are subject to Environmental, Social, and Governance (ESG) criteria, according to the Harvard Business Review. The combined value of those assets is $30 trillion. With that kind of money at stake, investors are demanding more and better data that can measure ESG activities and impact.
One company looking to fill in the gap is Net Purpose, a London-based startup that provides raw, quantitative data on the social and environmental outcomes of companies and investment portfolios, with the goal of helping investors align with evolving ESG standards and cut the time and cost it takes to build sustainable strategies.
Demand for Net Purpose’s data is such that the three-year-old startup has already attracted financial backing from a wide range of investors, including Illuminate Financial; Jim O’Neill, the former Chair of Goldman Sachs Asset Management; and Kevin Gould, Co-Founder of IHS Market.
Net Purpose’s central mission is to simplify the ESG reporting process for investors, who can then use its data to gauge the performance of their portfolios against the United Nations’ Sustainable Development Goals (SDGs) and other impact measurement standards.
Now that ESG has become a major part of the investment equation, one of the central challenges is finding clean and reliable research.
“It’s just really hard because (the data) is in thousands of different places and can often be inaccessible to a wider community,” Sam Duncan, Net Purpose’s co-founder, and CEO told the Sifted website in December.
Net Purpose’s response has been to develop a comprehensive database on a range of ESG issues, including renewable energy, CO2 emissions, healthcare provisions, and female representation in the workplace.
The company has aggregated impact data from more than 1,000 listed companies that are signed up to standards such as the UN SDGs, Sustainability Accounting Standards Board (SASB), and Global Reporting Initiative (GRI). Its next step is to source data from private markets as well as impact measures.
On its website, Net Purpose lists three basic steps clients can take once they sign on to the service:
- Select your goal(s): The first step is to select sustainability goals and standards. Net Purpose’s data infrastructure was created to map to all evolving standards so that clients can stay at the forefront of regulatory compliance.
- Access data: Net Purpose cleans and structures data from thousands of different sources, which gives investors access to real social and environmental outcomes.
- Measure the impact of your portfolio: In this step, investors can report on the social and environmental outcomes of their portfolios, assess their performances against benchmarks, and identify ways to optimize their performance
“We’ve started with 10 of the most common and pressing themes, such as climate, gender equality, water, access to financial services, and we plan to include more,” Duncan told Sifted. “Biodiversity and food security are examples of themes we haven’t yet covered.”
She expects that sustainability metrics will become more standardized over the next half-decade, though there’s still a lot of work to be done on that end. The good news is, much of the heavy lifting has already been done.
“If we can enable investors to start reporting on their impact, that’s a first step to understanding the full performance of your portfolio and making more informed investment decisions,” Duncan said.
