BST Awards 2024: Best ESG data provider to the buy side—Fusion by JP Morgan

Overview

JP Morgan’s Fusion service is designed to address the challenges of managing ESG data at multiple touchpoints, including integration from multiple sources, ensuring consistency, complex screenings, manual calculations, and linking to analytics. ESG data is often inconsistent and incomplete and thus requires cleaning/scrubbing. Multiple sources lack standardization and datasets require customization to ensure accuracy. Screenings involve numerous criteria and custom metrics are manually intensive. Transparency around private assets is lacking and linking data to dashboards is time-consuming. Delivering usable data to teams and end-users is an ongoing challenge.

The solution  

• Data integration: Fusion integrates ESG data from multiple providers, including Bloomberg, FactSet, MSCI, ISS ESG, RepRisk, S&P Global, and Sustainalytics.
• Data normalization: Fusion reduces data wrangling by normalizing ESG data for consistency, with standardized identifiers and formats, ready for joins and analysis.
• Multi-hierarchy support: Fusion manages corporate hierarchies and data propagation rules to address inconsistencies and gaps, broadening the investible universe.
• Custom screening criteria: Fusion supports inclusion/exclusion criteria, enabling investment universes to be aligned with sustainability mandates.
• Metrics calculation: Fusion provides tools for calculating custom ESG metrics using normalized data.
• Private assets support: Fusion overlays ESG data on private asset holdings, integrating ESG considerations into due diligence, screening and evaluations.
• ESG analytics: Fusion provides analytics for assessing portfolio ESG performance, including dynamic calculations, real-time insights, drill-down and roll-up capabilities, and customizable data visualizations and grids for tailored reporting.

Secret sauce  

Fusion was developed to allow buy-side investors to extract maximum value from ESG data in minimal timeframes. It features:

• Multiple ESG providers, normalized: Fusion ingests and normalizes data using AI/ML-powered identifier synthesis, ensuring consistent IDs for immediate analysis.
• Modern technology architecture: Fusion is a cloud-native platform with no legacy constraints. Its data architecture, featuring a linked data model and graph technology, allows the addition and modeling of new data for faster client deployment.
• Pre-integrated with client investment data: Fusion integrates with JP Morgan Securities Services (approximately $30 trillion under custody) and other fund administrators, enabling clients to overlay IBOR and ABOR data with ESG management and analytics services.

Recent milestones

New capabilities rolled out:

• Multi-hierarchy support: Fusion manages corporate hierarchies and data propagation rules to address ESG data gaps, broadening the investible universe.
• Custom screening criteria: Fusion supports inclusion/exclusion criteria for dynamic investment universes aligned with sustainability mandates, with results accessible through any cloud channel.
• Metrics calculation: Fusion eliminates ad-hoc offline calculations. Normalized data is used to calculate custom ESG metrics, available for rules-based screening and hierarchy-based metrics propagation.

Future objectives

Fusion will add new capabilities for ESG and private assets, enabling the buy side to:

• Integrate ESG considerations into pre-deal investment due diligence, screening and evaluations for private markets
• Collect and monitor ESG data of portfolio companies aggregated at the fund-level
• Understand drill down ESG exposure of private equity and/or private debt funds.
• SDG/ESG framework alignment in board/regulatory reporting and LP/GP reporting

Why they won

Ask any portfolio manager or data practitioner about their primary challenges relating to the use of ESG data and you’re likely to hear a variation on two themes: It has to be accurate, transparent and originate from a reliable source; and it must be easy to consume and ingest so that existing portfolio management workflows and downstream systems can incorporate all datasets with the minimum of wrangling. 

Clearly, JP Morgan’s Fusion service understands the importance of providing clean and normalized ESG data to its substantial clientele, which helps set it apart from other providers in what has become an intensely competitive marketplace since the onset of the Covid-19 pandemic in early 2020. Of course, ESG-driven investments have been knocking around the industry for decades, but it’s really only been the last five or so years that ESG has become “a thing.” JP Morgan’s list of ESG data partners is a veritable who’s who of the data world, which further underlines its reputation across the industry and the value it provides its clients on the ESG front.