The Challenge
For over ten years, this global asset manager built its environmental, social, and governance (ESG) strategy using two separate data vendors but was limited in the ability to connect them as one cohesive dataset. Creating a complete picture of their securities, environmental exposures, and sustainability risks required a more structured process; the ESG team needed a solution to normalize different sources of information and align disparate symbologies to group third-party data. Being primarily focused on credit instruments, the team had an additional complication in linking security-level data from a single instrument back to the corresponding ESG data at the company level.
The Solution
Two main goals in mind, FactSet provided a comprehensive solution that would allow the firm to map its third-party datasets to a single master symbology through Concordance, as well as link data from the company level back to the investible securities using Data Management Solutions (DMS).
During the two-week deployment, in-depth training was conducted on the Concordance API, enabling the team to programmatically input third-party or market identifiers and return back to FactSet’s permanent symbology. By connecting to FactSet’s vast network of identifiers, the firm was not only able to resolve both ESG datasets to a common symbology, but also validate the security identifiers provided. Through this source-agnostic security mapping capability, the existing ESG sources became seamlessly connected and any new datasets could be stitched together. This created a foundation for new opportunities and significant scale in the future.
Security-level resolution via Concordance helped connect the existing datasets, however, the challenge of connecting company-level scores to the underlying credit instruments remained. To eliminate this obstacle, FactSet introduced DMS, a comprehensive universe of public and private companies that includes a hierarchy designed to mirror a company’s legal and operating structure. This unique feature provides transparency into the relationships between the individual credit facility, issuer, and the ultimate credit parent. Combining DMS with Concordance allowed the firm to automatically map credit instruments back to the parent entity and blend multiple sources of ESG for a more holistic view.
The Results
Because of FactSet’s complete data management solutions, the firm can save time by linking credit instruments to issuer-level ESG data, whereas before this process was done manually. The team can now create their own in-depth analyses by combining ESG scores and insights from multiple sources, resulting in a better understanding of their investment risks and exposures.
"Why didn’t we do this two years ago? It would have saved us so much time.”
The ESG team can continue to expand and incorporate more datasets to deepen their credit analysis and can easily build robust, new extensions to their investment process. Having access to FactSet’s expansive set of reference data and unique content provides transparency and scalability across the business, fully supporting the optimization of workflows across its organization.
Looking ahead, FactSet can provide additional support with seamless integration of its industry-leading FactSet Truvalue ESG data, supplemental information around the credit health of a company, or individual terms and conditions at the security level. The firm’s leadership believes that other teams would benefit from Concordance and DMS for workflows outside of ESG and plans to explore these options in the future.
