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Data is only as good as our understanding and reporting of it

The same information set can produce vastly different interpretations


Pete Carvill

F. Scott Fitzgerald, in his essay ‘The Crack-Up’ for Esquire in 1936, wrote: “The test of a first-rate intelligence is the ability to hold two opposed ideas in the mind at the same time, and still retain the ability to function.”

It is often that way in news reporting, too. An obscure reference, but the character of MacKenzie McHale in the TV series The Newsroom began the series by berating her staff with the words: “There aren’t two sides to every story. Some stories have five sides; some only have one.”

And that is how we have ended up on two different takes on the same report (Global Sustainable Investment Review 2020) by two different news organisations (Bloomberg and International Investment).

Different but the same

Published earlier this week by the Global Sustainable Investment Alliance (GSIA), the Global Sustainable Investment Review 2020 looks, in its fifth edition, to map ‘[…] the state of sustainable and responsible investment of major financial markets globally, combining regional data from the United States, Canada, Japan, Australasia and Europe’.

What is more, says the organisation: “This year’s report shows the continuing prevalence of sustainable investment across the global investment industry, with assets under management reaching US$35.3tn, a growth of 15% in two years, and in total equating to 36% of all professionally managed assets across regions covered in this report.”

So, how was it all reported?

Well, International Investment went with the headline and lede of, ‘Global sustainable investment hits $35.3trn as investors seek more ESG integration’. Bloomberg, meanwhile, plumped for, ‘European ESG Assets Shrank by $2 Trillion After Greenwash Rules’.

It is only when you get into the first couple of paragraphs of each story that you realise that they have sprung from the same well.

The GSIA is first mentioned in the second paragraphs of the International Investment story, while Bloomberg goes with it in the lede. And while the former makes clear that it is based on a published report, the latter refers only to ‘data’ from the GSIA.

Same song, different tune

So we have two different reports, based on the same dataset, that have drawn out divergent stories. But which one is correct?

Actually, it is both of them.

This is from the ninth page of the GSIA report: “At the start of 2020, global sustainable investment reached USD35.3trn in the five major markets covered in this report, a 15% increase in the past two years (2018-2020) and 55% increase in the past four years (2016-2020).” This is what International Investment went with.

Bloomberg excised a little more delicately their story, but it comes from the same page. In a table called ‘Snapshot of global sustainable investing assets, 2016-2018-2020 (USD billions)’, figures for different regions in 2016, 2018, and 2020 are given. It is there that we see in Europe that the numbers jump from $12,040bn in 2016, to $14,075bn in 2018, and then dropping to $12,017bn in 2020′.

And to the right of the data table that Bloomberg based their story on? The non-sentence ‘Global sustainable investment at $35.3tn’. Which is what International Investment went with.

Two sides of the same coin.

Skating away

Here is another angle on it all, one that I hope encompasses both what Bloomberg and International Investment focused their reporting on: Investment firms are increasingly driving their resources into sustainable products as the market begins to correct and regulate itself better.

This angle is based on other observations by the report’s authors: not just that global sustainable investment is now worth $35.3tn in five major markets, up 15% in the last two year, but also that sustainable investment AUM make up 35.9% of all AUM, up from 33.4% in 2018. And it is important to know that this is a market that is still growing.

Maybe the biggest surprise is that the largest growth in absolute terms is coming from Canada at 48%, leading the US, Japan, and Australasia at 42%, 34%, and 25%, respectively. It is as if someone asked the Canucks how far they were willing to go on this, and got the reply, “Just watch us.”

Last month, the first European Sustainable Investment Fund Study was released, and it found that 11% of total net assets within Europe were in sustainable funds. That same report found that sustainable funds accounted for 52% of new inflows last year. Bear in mind, too, that two weeks ago the Net Zero Asset Managers Initiative (NZAMI) found that nearly half of AUMs around the world were being managed by those pledging to meet climate goals.

So we have a situation now in which investment is moving steadiliy in a sustainable direction. And even while Greenpeace rightfully points out that greenwashing is an issue, organisations like the Global Reporting Initiative and the European Financial Reporting Advisory Group are joining forces to cooperate in this area. Even the moribund UK is getting in on the act.

Disparities emerging

To go back to Global Sustainable Investment Review 2020, the most important sections, to me, seem to be the ones that are missing from the Bloomberg and International Investment reports.

The GSIA authors state that growth in sustainable investment has slowed in Australiasia, still rising but at a slower pace—25% between 2018 and 2020, compared to 46% between 2016 and 2018. This is the same story across much of the globe—a high rate of growth followed by a significant slowdown.

Between 2014 and 2016, 2016 and 2018, and 2018 and 2020, sustainable investment growth in Canada went from 49% to 42% to 48%; in Australasia from 248% to 46% to 25%; and in Japan from 6,692% to 307% to 34%.

It was only in the US that growth per period actually increased over these years (33% to 38% to 42%).

This is a rapidly growing market, and one that has yet to develop and mature properly. The important story from here on in will not be the ones that we tell of the past, but of the one we want to tell of the future.