ESG InvestingApr 14 2023

JOHCM chief executive warns on 'gaps' in ESG data

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JOHCM chief executive warns on 'gaps' in ESG data
JO Hambro Capital Management chief executive Alexandra Altinger

The chief executive of JO Hambro Capital Management said the fund boutique has invested in its own ESG data team because the data available from providers had "huge gaps".

Alexandra Altinger said JOHCM is looking to launch a couple of climate transition funds and some thematic funds which are focused on sustainable development goals.

But she questioned the reliability of ESG data from third party providers.

Altinger said: "We have had to create our own sets of data. We have been using some data providers but we found there to be huge gaps in the data so it was very difficult to map the whole portfolio.

"You cannot go to the client and say 'there is 15 per cent of the fund where no one knows how to map it' so we realised very quickly that we needed to invest in our own data."

You cannot go to the client and say 'there is 15 per cent of the fund where no one knows how to map it'Alexander Altinger

Last month HM Treasury launched a consultation into whether ESG ratings providers should be regulated.

The Treasury said there was a clear benefit to be gained from improving the transparency of the methodologies, governance and processes of these providers because of the increasingly important part they play in investment decision making.

The FCA has previously warned that there was a low correlation between different providers’ ratings on any given entity.

Altinger declined to comment on the consultation but said she saw a "strong need" for JOHCM to develop and manage its own data.

But she did warn that it was "becoming more complicated to do the same thing" because of the number of different ESG regulatory regimes - including the EU's SFDR regime and the UK's SDR regime.

Altinger said: "We are trying to be regulation agnostic and regime agnostic. We will try and adhere to the higher standard but it is tricky because the language the UK is using is different to the language the EU is using."