David Harris
This year, LSEG is marking 25 years since the launch of the FTSE4Good family of sustainable equity indexes – and a quarter-century of innovation in sustainable investment. This presents an opportunity to look forward to a fast-evolving sustainable investment marketplace, as well as reflect on dramatic changes in how investors think about and respond to the sustainability theme.
To mark the FTSE4Good anniversary, we celebrated with a pair of events. The first was the 20th anniversary of the Principles for Responsible Investment – an initiative that we helped set up and became a founding signatory of in 2006.
The second brought together many of those behind the launch of FTSE4Good, and clients and users past and present. It served as a reminder of how far sustainable investment has come over the last couple of decades and provided a forum to discuss where the sustainable investment market is going next.
Twenty-five years of innovation
Since its launch in 2001, the FTSE4Good index family has helped shine a spotlight on corporate sustainability performance. It has provided a means for investors to deploy capital in line with their views on sustainability issues and has proved to be an important lever in engaging companies on improving their sustainability practices and performance.
It contributed to the development of what has become a wide range of sustainable index, data and analytics products across LSEG that now covers the entire capital markets landscape. These include: the Green Revenues data model, which identifies a $5.49 trillion sustainability opportunity across global listed equities; the Sustainable Bond Market, where more than 170 issuers have placed more than 720 green, social, sustainable and sustainability-linked bonds, raising almost $422 billion; climate-adjusted sovereign bond indexes; and transition finance data and analytics.
The next 25 years
LSEG is continuing to innovate in sustainable finance. Earlier this year, LSEG released its updated ESG Scores, following the simplification, restructuring and reimagining of our existing product, in response to evolving client needs, corporate practice and regulatory developments.
Making ESG data more relevant and decision-useful is vital in the face of recent market scepticism and challenge, said Katharina Schwaiger, Head of Sustainable Investing Intelligence at investment giant BlackRock.
“The case for data is stronger than ever,” she said at the event. “But what has changed is that we are not tolerating bad or vague ESG data or narratives anymore. The bar has risen and the quality has risen as well.” Critical to the relevance of ESG data is the need to link specific data points to sustainable outcomes, she added.[note1]
In preparing to update LSEG’s ESG Scores, “we started with a very simple question,” Elena Philipova, LSEG’s Director Sustainable Finance, told the conference. “What would ESG scores look like if they were built like financial data?”
“The future of ESG,” she continued, “lies in returning to the principles that made financial data work in the first place. Financial markets didn't scale because we had more data. They scaled because there was standardisation, transparency and auditability.” [note2]
From backward-looking to real-time
One similarity that corporate ESG data shares with financial information is that most of it is factual and published by companies providing details of a previous period, whether in quarterly or annual reporting. However, advances in technology hold the promise of accessing near-real time information to understand changes in a company’s sustainability performance.
As the availability of alternative data sources increases, the discussion around whether sustainability performance has the potential to become a more dynamic factor in investment analysis arises. A growing volume of signals can provide insights into a company’s sustainability strategy, and advances in data collection and processing are making it easier to identify and interpret those signals.
For example, announcements about project delays may indicate that a company is slowing progress towards its decarbonisation goals, while procurement updates could suggest momentum is building. By analysing these developments as they emerge, investors may be able to identify signs that a company is accelerating or decelerating its transition well before those changes are reflected in formal sustainability disclosures. [note2]
Closing the gaps
Inevitably, in a fast-changing field, new demands for ESG data and analytics are emerging. Many investors are seeking a clearer picture of sustainability risk and opportunity in company supply chains – particularly in terms of Scope 3 emissions and physical climate risk and resilience. [note3] Here, the ability of AI to analyse vast quantities of data may hold significant promise, the event heard.
Transition finance continues to be a “particularly complex and sensitive area”, noted Shrey Kohli, Head of Debt Capital Markets and Issuer Services at LSEG. Many economies in Asia, in particular, have large carbon-intensive sectors with enormous need for capital to support their decarbonisation. [note4] However, without clear decarbonisation pathways defined by policymakers, sustainable debt investors are struggling to provide that capital.
“We would like to see more countries [join] the conversation around transition finance … That's where we're investing time with issuers to push the conversation forward,” he said. [note5]
The challenge of our generation
Our 25-year anniversary event also discussed the current impacts of conflict in the Middle East, oil shocks, energy security and geopolitics. This included the interplay of finance and policy in responding to changes to climate policy and the pressure that some international institutions face regarding their work addressing climate change and other sustainability issues.
Steve Waygood, Founder of the Finance Transition Centre and a sustainable investment veteran known in particular for his long tenure in senior roles at Aviva, challenged the event to “think and act even bigger than we have over the last 25 years” to provide “the best ideas… to the policy makers who can correct market failures, can internalise externalities and can change the market fundamentals so that money finances the transition. That has to be the challenge of our generation.” [note6]
That is a challenge that we at LSEG can play our part in responding to. As a provider of data and analytics, we help equip investors with the tools and insights to understand changing market dynamics, the evolution of a sustainable global economy and to assess associated risks and opportunities. As an index provider, we offer a choice of frameworks investors can use to allocate capital to reflect those investment beliefs. As a financial infrastructure provider, we deliver marketplaces and services that support companies and other users of capital seeking to raise debt and equity finance.
But, ultimately, the pace and scale of progress will depend on the choice’s investors, companies and other market participants themselves – choices to set clear long-term priorities, to maintain ambition in a complex environment and to act decisively in financing the transition ahead.
footnotes
[1] 25 Years of Sustainable Innovation: What's next for sustainable index solutions? | Back to Note 1
[2] 25 Years of Sustainable Innovation: How did we get here, the future of sustainable data and the impact of AI | Back to Note 2
[3] Amundi Research Center, Measuring Scope 3 Emissions: Implications & Challenges for Investors (2025). | Back to Note 3
[4] Asian Development Bank (ADB), Decarbonising Southeast Asia’s Hard-to-Abate and High-Emitting Sectors: Transition Finance, Technologies and Policy Approaches (2025) | Back to Note 4
[5] 25 Years of Sustainable Innovation: What's next for sustainable index solutions? | Back to Note 5
[6] 25 Years of Sustainable Innovation: How did we get here, the future of sustainable data and the impact of AI | Back to Note 6
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