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    Transparent Nordic ESG Data for All

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    Stockholm (NordSIP) – Access to high-quality ESG data is often quoted by responsible investors as one of their biggest challenges. Sourcing, cleaning, and validating the vast amount of information needed to make informed sustainable investment decisions takes a lot of dedicated effort and resources. To help their clients as well as the general public address some of these issues, Nordic Trustee’s subsidiary Stamdata recently launched NordicESG.com, a source of consistent and timely ESG data, covering more than 1.700 companies engaged in the Nordic capital market as bond issuers or publicly listed entities. Rather conveniently, the data is available to all on the website, free of charge for non-commercial use. Professional investors, however, can integrate the information seamlessly through API or data feed.

    NordSIP reached out to two of the people involved in the design and execution of the new offering – Aleksander Nervik, Executive Vice President of Digital Products & Development and Casper S Svendsen, ESG Market data services at Stamdata – to hear more about this laudable initiative.

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    Stepping out of the comfort zone

    “Launching NordicESG.com has been quite challenging but also extremely satisfying,” admits Nervik. “The biggest hurdle was to overcome the uncertainty associated with stepping into something completely new, which ESG data was for us. In our core field of expertise, as a bond trustee and loan agency service provider, Nordic Trustee has long been recognised as an undisputed leader in the Nordic region. Our subsidiaries, Stamdata and Nordic Bond Pricing are also known for providing high-quality bond market data. ESG data is, however, a different ball game that requires a new set of deep expertise and dedicated resources. I am very excited to be a part of building this offering,” he adds.

    Ultimately, it was client demand that pushed Stamdata to take the plunge into providing ESG data. Many investors were struggling to fulfil their sustainability reporting obligations as the EU Sustainable Finance Disclosure Regulation (SFDR), for instance, came into power. Since several customers approached Stamdata asking for help to bridge the data gap, the company decided to explore the idea. To better understand their clients’ needs and challenges, Stamdata initiated a market consultation based on an innovation methodology approach, collecting feedback from twelve of the largest asset managers and asset owners in Norway. Going back to the drawboard, they set about designing a suitable value proposition that turned out to be ‘spot on’, according to the same reference group.

    A manual treasure hunt

    Fast forward to today, and a team of full-time analysts with master’s degrees in sustainable finance aided by part-time students are busy going through all available reports from companies in the Nordic region to collect ESG data. “It feels like a treasure hunt for us analysts,” says Svendsen, one of the experts hired specifically for the task. “We do most of the work manually, as companies do not report in a standardised format. Although we use data logic and automatization to validate the data and find outliers, it often takes the trained eye of an analyst to see if the reported numbers make sense.”

    Compiling and estimating ESG data is new for many companies, still trying to figure out the detailed requirements under the EU Taxonomy, or the SFDR’s Principle Adverse Impacts (PAIs). This also means that data inaccuracies abound. “Sometimes, reported data can be wrong by as much as a factor of 1000,” explains the analyst, recalling a recent case when he and his colleagues had to challenge a Swedish company to significantly revise its CO2 emissions. “The most effective method to identify such anomalies is by analysing the companies within our extensive database. This approach allows us to verify and validate the figures reported by the companies.”

    Attempts to implement AI, specifically ChatGPT builder, are underway. “Yet, although the AI generates results that seem logical, they often turn out to be inaccurate or irrelevant,” explains Svendsen. “ChatGPT struggles, for example, to decide whether to base scope emissions on equity or financial control, as this varies from company to company. Such decisions need the expertise of trained analysts to determine the most appropriate approach for each case. We are, however, looking into the machine-readable format called ESEF XBRL to help us cover more companies efficiently.”

    Who’s afraid of the competition

    Providing ESG data is big business these days and there are plenty of vendors offering their services to asset managers and asset owners. So, what is it that distinguishes Stamdata’s offering from the pack? “For one, we have a Nordic focus and a strong presence in the region. Within the Nordics, we cover both bond issuers and equity issuers, as well as companies outside of the capital markets,” explains Nervik. “This means we can provide our customers with more robust industry averages.”

    “Unlike international vendors who often depend on secondary sources, we maintain direct control over our data and can be transparent about it,” adds Svendsen. “A while ago, a customer identified a data discrepancy for a Nordic company covered both by us and an international data vendor. We were able to respond within 30 minutes providing a comprehensive breakdown of our calculations and methodology. In contrast, the other vendor was unable to do so, as they were legally restricted from sharing purchased data.”

    Timeliness is another big advantage of the data provided by Stamdata. “Our clients tell us it can take up to eight months for the international vendors to update their database with the relevant information,” explains Svendsen. “We monitor daily the reports of the Nordic companies we cover and upload the ESG data without any delay.”

    However, what makes Stamdata’s database really special, according to Nervik, is being able to leverage the company’s strong relationship with its customers. “It enables us to discuss the data, give and receive feedback, thoughts, and ideas to ensure that the quality of the service we provide continuously improves.”

     

    Julia Axelsson, CAIA
    Julia Axelsson, CAIA
    Julia has accumulated experience in asset management for more than 20 years in Stockholm and Beijing, in portfolio management, asset allocation, fund selection and risk management. In December 2020, she completed a program in Sustainability Studies at the University of Linköping. Julia speaks Mandarin, Bulgarian, Hindi, Russian, Swedish, Urdu and English. She holds a Master in Indology from Sofia University and has completed studies in Economics at both Stockholm University and Stockholm School of Economics.
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