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What Allocators Are Really Doing to Track ESG Metrics Today

By Backstop Author

72% of allocators do not currently collect Environmental, Social and Governance (ESG) metrics on their private portfolios; top reason is lack of standardization of metrics 

(Chicago, IL, November 9, 2021) – Backstop Solutions Group, a leading provider of software and data solutions to the institutional investment industry, today published a report based on a survey of 131 allocator professionals. The study indicates that, although allocators desire to track ESG metrics on their private portfolios, only 28% of them are currently doing so – illuminating just how far the investment industry still has to go to make ESG-based investment decisions a reality.

Citing a lack of standards on ESG issues, irregular submission of data by investment managers and difficulty storing information, institutional investors described their ability to monitor ESG metrics in their private portfolios as being well below their desire to gather such data.

More than 40% of those who do not currently track ESG metrics on their private portfolios said they hope to track them in the future, and almost 60% of those hope to do so within the next year.

“Allocators and private portfolio managers alike are wrestling with how to capture ESG metrics. Both came to Backstop Solutions – a leading provider of investment management software – for answers. We undertook this research intending to learn which ESG metrics allocators are currently tracking, what they are having a difficult time getting, and what has changed over time. But what we found was not what we expected: most allocators are not, in fact, currently tracking ESG metrics on their private portfolios today. The top reason they cited was the lack of a universal standard for measuring and reporting on ESG,” said Maryling Yu, Chief Marketing Officer of Backstop Solutions Group. “But our research can still drive broader industry dialogue around ESG, and uncovers steps that organizations can take today, despite the lack of a framework, to make progress in ESG.”

The report concludes by sharing the advice of industry experts: both allocators and investment managers can start by engaging in conversations regarding shared values in terms of ESG principles and how to implement them, as well as sharing data and measuring it over time. As standards are created and best practices emerge for measuring and monitoring ESG metrics, ESG-based investing will continue to evolve.

About Backstop Solutions:

Because every minute matters, Backstop’s mission is to help the institutional investment industry use time to its fullest potential. We develop technology to simplify and streamline otherwise time-consuming tasks and processes, enabling our clients to quickly and easily access, share, and manage the knowledge that’s critical to their day-to-day business success. Backstop provides its industry-leading cloud-based productivity suite to pensions, institutions, endowments, foundations, family offices, investment consultants, funds of funds, hedge funds, private equity, real estate investment, and venture capital firms. For more information, please visit www.BackstopSolutions.com.

By Backstop Author