Diversified Financial Future Reimagined: Will ESG Data and Services Demand Accelerate Post-COVID & Who Will Win?

The adoption of ESG and sustainable investing will likely continue to accelerate, with the pandemic shining a light on various areas across E, S, and G; and will likely include Exchanges, Asset Managers, and Banks, among others.

18 Jun 2020

Asset under Management of Signatories the United Nations Principles for Responsible Investment

Future Reimagined: Will ESG Data and Services Demand Accelerate Post-COVID & Who Will Win?
Source: UNPRI, UBS

Notes: AUM in trillions of $, UNPRI 2018 annual report indicates that total 2018 AUM was $89, 7tr when factoring out double counting from most asset owners and asset managers, as of April 2018, total AUM for past 3 years excludes double counting resulting from subsidiaries of PRI signatories also reporting and managing external assets

The chart shows the number of Signatories and Asset owners who have signed the United Nations Principles for Responsible Investment year-on-year.

ESG Data & Services: A ~$2.2bn total available market (TAM), with blue-sky upside of $5.1bn by 2025

ESG has come a long way since our initial deep dive last year, and while the opportunity is still in its early days, we believe growth will accelerate post COVID-19. In this Q-Series report, we analyze the rapidly growing market for Information Services providers, which we currently estimate to be ~$2.2bn, and outline potential scenarios for growth over the next five years. We also highlight UBS Evidence Lab data, which points to bullish expectations for ESG data spend, while "Performance of ESG investing" and "Lack of reporting standards" are cited as the most important topics. In our blue-sky scenario, we think the TAM can reach $5.1bn in 2025 (~18% CAGR).

ESG initiatives moving front-and-center across multiple industries

The impact from accelerated ESG demand is not limited to Information Services companies, but also includes Exchanges, Asset Managers, and Banks, among others. In this report, a team of 14 UBS equity, credit, and ESG analysts around the world explore the implications of stronger demand for ESG data and services, highlight the most favored stocks on this trend, and discuss implications for corporate credit investing.

Adoption of ESG poised to accelerate post COVID-19

Our dedicated ESG team believes that adoption of ESG and sustainable investing will continue to accelerate, with the pandemic shining a light on various areas across E, S, and G, including an emphasis on social. In particular, there will likely be an increased focus on system resilience following the disruption caused by COVID-19. As a result, we think that this places even more importance on the role of data and analytics in assessing the outlook for ESG, which should benefit information services providers.

Authorized clients of UBS Investment Bank can log in to UBS Neo to read the full report.