The European Commission's recommendation to create an EU-wide 'single access point' as part of the capital markets union (CMU) would open up greater access to comparable environmental, social and governance (ESG) data, according to the European Fund and Asset Management Association (EFAMA).
The establishment of a continental-wide single access point was part of the European Commission's High-Level Forum's final report on the CMU released on 10 June.
The report outlined a series of 17 interconnected measures the European Union (EU) needed to urgently implement to remove the biggest barriers in capital markets.
This constitutes a clear impediment to the effective functioning of CMU that needs to be addressed head-on through decisive actions from policymakers and supervisors."
One of the recommendations was to establish an EU Single Access Point to enable central access to financial and non-financial public corporate disclosures under existing EU disclosure rules.
It would provide a single place for financial and sustainability-related information, which is currently scattered across the EU.
EFAMA backed the move, saying insufficient availability of comparable and reliable ESG data "remains a key challenge" in the development of sustainable finance and gaps were currently stifling market potential.
EFAMA said the report's recommendation echoed calls from a consortium of trade associations across the continent.
A joint letter (sent on 9 June) from six organisations, including the European Banking Federation, EFAMA and Pensions Europe, called for EU action to create a centralised register for ESG data in the union.
It said: "Robust, comparable and reliable ESG data is also key to identify and assess sustainability risks in lending activities.
"In addition, availability of ESG data is also necessary to enable financial institutions and investors to steer their portfolios towards the objectives of the Paris Agreement and of the European Green Deal much more efficiently and on a much broader scale.
"Unfortunately, the availability of quality, comparable, reliable and public ESG data is currently rather limited and insufficient to comply with the increasing expectations and new regulatory requirements due to apply shortly."
The letter added: "When available, data is often difficult to compare and raises reliability questions. Moreover, ESG data by third-party providers is often expensive in particular for small-size financial market players, researchers or academia.
"With an increasing demand for ESG information, the fragmentation in ESG third-party data providers risks to lead to insufficient availability of comparable and reliable ESG data as well as to unnecessary costs and competition concerns.
"Therefore, ensuring availability of high quality and comparable ESG data should be regarded as an EU strategic infrastructure project to meet the EU sustainability objectives both under the Action Plan on Sustainable Finance and the EU Green Deal."
Elsewhere, EFAMA raised the issue of data cost and said it was disappointed the High-Level Forum's report failed to recognise it.
"On a more critical note, we are disappointed to see that the report does not refer, even incidentally, to the increasingly important issue of data costs.
"Asset managers are among the most important users of data (market data, index data, ESG data…) and have been witnessing a steady increase over recent years in the cost of use of such data, which does not appear to be commensurate with the cost of production and dissemination by data providers and distributors.
"This constitutes a clear impediment to the effective functioning of CMU that needs to be addressed head-on through decisive actions from policymakers and supervisors," the body commented.