APAC leads global ESG push as 67% of firms see 'material impact'

Financial institutions also cite ESG growth and data hurdles.

Sixty-seven percent of respondents in the Asia-Pacific (APAC) region state that ESG factors gained materiality during the past five years, marking the highest regional response, according to a Morningstar Sustainalytics report.

The APAC region constitutes 15% of the survey sample, alongside respondents from Europe, the Middle East, and Africa with 51% and the Americas with 30%.

The report also cites that financial institutions identify data quality and coverage gaps as the primary obstacles to sustainable investment. It also reveals that 47% of respondents encounter incomplete information across asset classes.

Firms list regulation-aligned data as the top priority for the next year at 58%, with greenhouse gas emissions data (56%) and ESG risk ratings (49%) following.

International Sustainability Standards Board disclosures are a requirement for 73% of firms. Sustainable bond data and EU regulatory data are priorities for 68% and 62% of respondents, the Morningstar report said.

Data quality concerns affect 41% of participants, whilst another 40% cite inconsistencies between data vendors.

To manage this information, 19% of firms seek API or bulk feeds for enterprise systems, as risk calculation engines and fund analysis tools are priorities for 18% of the group.

Exits from the market represent 2% of firms, whilst entrants represent 6%. Growth in market share is a factor for 22.8% of participants.

For the next three-year period, 60% of respondents expect an increase in the number of market participants, the report notes.