ESG Data And Analytics Providers

Ask two credit rating agencies to rate the same bond and they will land within a notch of each other. Ask two ESG rating providers to rate the same company and they can reach opposite conclusions.

This is not a marginal quirk. Academic research on rating divergence has repeatedly found correlations between major ESG providers far below what any other rating market would tolerate, and the disagreement is structural rather than a matter of one provider being sloppy.

That single fact explains almost everything about how this category evolved, including why Forrester quietly removed a word from its name.

Why the ratings disagree

Three separate sources of divergence compound.

Scope divergence. Providers disagree about what belongs in an ESG assessment at all. One includes lobbying activity and tax practices, another does not. One weighs supply chain labour conditions heavily, another treats it as peripheral. There is no equivalent of generally accepted accounting principles here, so each provider is measuring a slightly different construct and calling it the same thing.

Measurement divergence. Even where two providers agree a topic matters, they measure it differently. Carbon intensity per unit of revenue and absolute emissions produce different rankings of the same set of companies, and both are defensible.

Weighting divergence. Having measured a set of indicators, providers combine them into a score using proprietary weights. A company strong on environment and weak on governance scores differently depending on how the provider values each.

None of these are errors. They are judgements, and reasonable analysts make them differently. The problem is that the output looks like a measurement, and a buyer treating a score as a fact about the world will be surprised when a different provider's fact contradicts it.

The word that left

Forrester's 2022 evaluation of this market was titled ESG Ratings, Data, And Analytics. Its 2024 evaluation is titled ESG Data And Analytics Providers.

Ratings came out.

That is a fair reflection of where buyers went. Once you understand that scores encode a provider's judgement rather than an objective assessment, buying a score means outsourcing a judgement you may need to defend. Investment firms with a thesis, and corporates preparing regulated disclosures, increasingly want the underlying data so they can apply their own weighting and explain it.

The scores did not disappear and providers still sell them. They stopped being the thing the category is named after.

What the criteria actually measure

The clearest evidence for that shift is the criteria list from the Q3 2024 evaluation. Eleven of the twenty five are publicly identifiable, and the pattern is unmistakable.

Data coverage. Data collection. Data analysis. Data timing. Data quality. Data verifiability. Transparency and explainability of methodologies. Data integration. Workflow integration. Alignment with standards and frameworks. Customer service.

Almost every one of those is about provenance and usability rather than about the sophistication of the assessment. Where does the data come from, how current is it, can it be traced to source, is the methodology explainable, and does it reach the systems where decisions get made.

Data verifiability and methodology transparency are the two that matter most, and they exist as criteria precisely because of the divergence problem. If you cannot trace a figure to its source and cannot explain how it was derived, you cannot defend it when a regulator, an auditor, or an investor asks why your number differs from someone else's.

Inside The Forrester Wave: ESG Data And Analytics Providers, Q3 2024

Published in Q3 2024, the evaluation scored twelve providers against twenty five criteria across current offering and strategy, sorting them into Leaders, Strong Performers, Contenders, and Challengers. Its stated audience covers investment, sustainability, and risk professionals.

Clarity AI placed as a Leader with the highest score in both the current offering and strategy categories, taking the maximum score in twenty one of the twenty five criteria. Forrester credited the quality of its data and its use of machine learning for collection, extraction, and mapping, positioning it for customers integrating sustainability impact, climate metrics, and principal adverse impacts into decision-making and reporting. That last term is European regulatory vocabulary, and its presence in the assessment is not accidental.

Bloomberg also placed as a Leader, taking the maximum score in nineteen of twenty five criteria, including data coverage, collection, analysis, timing, quality, verifiability, methodology transparency, integration, standards alignment, and customer service. Forrester characterised it as a top choice for a centralised ESG data platform covering broad ESG and climate risk needs, standing out on the size, granularity, and currency of its data alongside analytical depth.

Note what those two Leaders have in common and how they differ. Both won on data rather than on scoring. One arrived from financial data infrastructure and added sustainability. The other was built for sustainability and uses machine learning to extract data at scale. Those are different products serving overlapping buyers.

What the 2022 field looked like

The predecessor was The Forrester New Wave: ESG Ratings, Data, And Analytics, Q3 2022, authored by Ryan Skinner with four contributors, scoring nine providers against ten criteria: Bloomberg, Clarity AI, EcoVadis, FactSet, Moody's, MSCI, RepRisk, S&P Global, and Sustainalytics.

Bloomberg took the highest current offering score in that edition too, differentiated on reported data, analytics capabilities, standards integrity, presentation, connections and integrations, and execution roadmap. Forrester's assessment at the time noted that offerings resting on raw data would only become more valuable as regulation raised the bar on non-financial reporting, which turned out to be an accurate call and describes the direction the whole category took.

The format change tells its own story. A New Wave with ten criteria is Forrester's format for emerging markets. A full Wave with twenty five criteria is what a mature market gets. Two years, nine providers to twelve, ten criteria to twenty five.

Worth noting the audience shift too. In 2022 this was addressed to sustainability and risk professionals and business leaders. In 2024 investment professionals lead the list. The money moved to the front.

Estimated data is most of the data

Here is the operational reality that buyers discover late.

Companies do not disclose most of what these providers report. Coverage of thousands of companies across dozens of metrics far exceeds what is actually published in sustainability reports, particularly for smaller companies, private companies, and emerging markets.

The gap is filled by estimation. Providers model undisclosed figures from sector averages, company size, geography, production data, satellite observation, and increasingly from machine learning trained on companies that do disclose.

Estimation is legitimate and unavoidable. The problem is that estimated and reported figures usually arrive in the same field, formatted identically, with nothing in the interface distinguishing a number a company published from a number a model inferred.

Two consequences follow. Divergence between providers is often divergence between estimation models rather than between assessments. And a figure you put into a regulated disclosure may be an estimate whose methodology you cannot fully explain, which is a materially different position from reporting a company's own published number.

Ask every provider what proportion of the data points you care about are reported versus estimated, whether that flag is exposed in the data you receive, and how estimation methodology is documented. Providers with strong verifiability scores will answer this comfortably.

Two regulatory regimes pulling apart

The demand driver for this category is regulation, and the regulatory picture has stopped being uniform.

In the European Union, sustainability reporting obligations have expanded substantially, with disclosure requirements reaching into supply chains and financial market participants required to report principal adverse impacts. That produces demand for granular, auditable, third-party data because the disclosures are mandatory and reviewed.

In the United States, the direction has been contested, with ESG-linked investment approaches facing political and legal challenge in several states and federal disclosure rulemaking following a less certain path.

The practical consequence for a buyer is that this data now serves opposite purposes in different jurisdictions. A European entity buys it to comply. A US entity may buy it to demonstrate that investment decisions were made on financial grounds, or to manage exposure to litigation about how sustainability factors were used.

That divergence is worth naming plainly because it changes the requirements. Compliance-driven buying prioritises auditability, framework alignment, and traceability to source. Risk-driven buying prioritises coverage and timeliness. A provider excellent for one may be adequate for the other, and the category label covers both.

What to test

Run the same universe through two providers. Take fifty companies you know well and compare the outputs. Where they diverge, ask each provider to explain why. The explanations will teach you more about what you are buying than any capability matrix, and the exercise usually kills the assumption that you are purchasing a measurement.

Ask for the source click-through. The ability to move from a data point to the document it came from is the single most valuable feature in this category and the one that separates serious providers. Forrester's inclusion of data verifiability as a criterion reflects this.

Establish the reported versus estimated split for your specific metrics and your specific universe, not in general.

Check update frequency against your reporting cycle. Sustainability data often updates annually, which means a provider's current figure may describe a company as it was eighteen months ago. If your disclosure or investment process assumes currency it does not have, that gap belongs in your methodology notes rather than in a surprise.

Test the integration rather than the interface. Data integration and workflow integration are both scored criteria for a reason. A dataset that requires manual export into a spreadsheet before anyone can use it will be used less often and less consistently than the vendor's demonstration implies.

And be clear about what you will do when providers disagree, because they will. An organisation with a documented position on which source governs, and why, is in a defensible spot. One that switches to whichever provider produced the more convenient number is building a problem for its future self.

Forrester does not endorse any provider named here, and tier placement should not be read as a recommendation to buy. Nothing here is investment advice.