A recent survey by BCT Digital, in collaboration with Chartis Research, has revealed that over 72% of financial institutions plan to invest up to $500,000 in ESG (environmental, social, and governance) technology. The survey highlights significant challenges in ESG and climate risk management.
The “Chartis Market View: ESG and Climate Risk Survey” gathered data from 77 ESG and climate risk professionals across financial institutions managing assets from $1 billion to $500 billion. These institutions span regions including APAC, North America, Europe, and MENA.
Key findings
Most firms review their ESG strategies quarterly, spending an average of $250,000 to $500,000 annually, with North American and European institutions more likely to exceed $500,000.
The next year’s investments are expected to focus on ESG data and scoring products, governance, risk management and compliance (GRC) solutions, and regulatory compliance and reporting tools.
As per the findings, when it comes to ESG, 52% of the respondents indicated regulatory compliance, being the most significant challenge. About 48% of the respondents identified risk assessment and mapping relevant ESG whereas another 48% viewed integrating ESG into operational and financial workflows as significant challenges.
With respect to climate risk, the main challenges are meeting regulatory stress testing expectations (67%), accurate GHG (Greenhouse gas) accounting (56%) and integrating climate risk operationally into product lines (50%). Most firms spend between $250,000 and $500,000 on climate risk solutions, with future investments likely to be directed towards emissions data, transitional climate risk modeling, and regulatory reporting tools.
Jaya Vaidhyanathan, CEO of BCT Digital, commented on the survey results, stating:
We are happy to present this survey that uncovers trends, challenges, and priorities within the ESG and climate risk space, addressing questions such as the evolution of technology markets, demographic impacts on risk planning, and the primary drivers of firms’ strategic agendas. There is a lack of uniformity in sustainability and climate risk reporting standards; different countries may have their own frameworks. This disparity makes it challenging for multinational corporations to maintain consistent reporting. We are ready to tackle the growing needs of the ESG and climate risk markets, and based on this survey, confident about addressing the intersection of these two fields.
This investment trend reflects the increasing importance of ESG and climate risk factors in the financial sector, driven by regulatory pressures and the need for robust risk management frameworks.
