A new global EDHECinfra survey of 100 infrastructure investors found that despite the obvious pressure to better report non-financial data, portfolio risk management is the most frequently cited reason for wanting ESG data.
The survey, titled Do Financial Investors Need Non-Financial Data?, set out to understand the drivers of demand of ESG data and the most relevant ESG impacts and risks for investors.
The survey uncovered three key findings, outlined as follows:
ESG risks are not priced. If ESG risks were fully priced, investors could in large part manage them through the prism of asset prices. Climate risks are extreme risks and require going beyond standard measures of risk like volatility and correlation metrics. However, not only is there a lack of robust data on tail events, but climate-related tail events are all in the future.
Investors care about climate risks. Of all the ESG risks, investors in infrastructure are overwhelmingly