Clearwater's Case for a Common ESG Metrics

Steve Doire at Clearwater Analytics takes on ESG metrics and other major needs of investment management firms in an FTF Focus podcast.

Institutional investment management firms are under pressure to provide hefty amounts of ESG-related information about their funds and portfolios to clients who have environmental, social, and governance concerns. Clearwater Analytics wants to do something about that issue and other related industry challenges.

While the concept of ESG-compliant funds is easy to grasp, many investment managers are struggling to gather that ESG data in part because there is a lack of useful metrics, says Steve Doire, who is the strategic client and platform advisor for Clearwater Analytics. Doire is the focus of a recent FTF Focus podcast.

While there are many suppliers of ESG data, there is a lack of consistency in the metric, among other concerns, Doire says.

“What we’re trying to do is come up with some kind of common set of ESG metrics. It’s probably not going to make everyone happy but it will be a way to look across managers and portfolios if we can accomplish it. We’ve got a team looking at this and right now we’re in this phase where we’re actually interviewing our institutional asset managers and talking to them about just this,” Doire says. “There’s no answer right now and I think you realize this when you see this out in the market.”

Clearwater officials are also reaching out to third-party providers who are also taking on this issue. The ultimate solution from the company, which may come over the next two years, may be a combination of a third-party offering and support from Clearwater.

“I wish it was solved yesterday,” Doire says.

Clearwater Analytics rings the NYSE Opening Bell on Friday, Sept. 24, 2021, the day of its IPO. In the photo: CEO Sandeep Sahai joined by staff members. Photo credit: NYSE

Clearwater, which won Best Client Reporting Solution for the 2021 FTF Technology Innovation Awards, has been gathering the major takeaways from two major survey efforts: an industry-wide insurance investment outsourcing report, and an internal survey that drew 1,000-plus respondents.

According to Doire, the top takeaways via the research are:

• “Many asset owners, and likewise their managers, are going into new asset classes. Everyone’s hurting for yield and they’re looking in every corner for … yield and return. ” This includes private asset classes;
• “There’s a need to aggregate this information. So, if you’re investing in multiple asset classes … and you’ve got multiple portfolio management systems, you need all the data aggregated – that’s important right? Often there’s multiple systems and then it’s just brute force Excel pulling things together.”
• “There’s a heightened demand for transparency for new asset classes.”

The podcast also covers how data scientists at Clearwater are exploring ways to leverage the information that becomes apparent via the analysis of $6 trillion worth of activity that the vendor oversees and facilitates. Clearwater provides a software-as-a-solution, also known as SaaS, for investment data aggregation, reconciliation, accounting, and reporting.

This podcast is produced by The FTF Exchange Podcast and can also be listened to here.