At Sibos 2025 in Frankfurt, Finextra interviewed Adrian Whelan, global head of market intelligence at Brown Brothers Harriman (BBH), regarding data scarcity, environmental, social, and governance (ESG) investing, and the industry’s approach to diversity and inclusion amid the current political climate.
Data is essential for technological advance, and Whelan highlights the issue of insufficient data in measuring ESG progress. While individual ESG components can be tracked, combining them complicates the analysis. Regulations involving “double materiality”—encompassing both financial and societal impacts—pose challenges for objective reporting.
The recent political shift in the U.S. has led many financial services firms to withdraw from sustainable initiatives and diversity efforts. Despite this, Whelan notes that some investors and businesses continue to pursue ESG opportunities, albeit more discreetly.
He observes that while firms remain committed to ESG investments, discussions around stewardship have shifted, and future commitments are less frequent. Institutional allocators are not driven by external regulations but rather by commercial motives, actively seeking investments aligned with purpose and values.
Whelan emphasizes that many institutions view ESG through a lens that considers the implications of climate change, product success, and social governance, distancing themselves from the politicized narrative surrounding the concept. He suggests that while the term “ESG” has been politicized and misused, advancements are occurring, with more data emerging to demonstrate that effective risk management can yield excess returns.
Regarding diversity, equity, and inclusion (DEI), Whelan points out that advocating for these initiatives has become a reputational challenge. He urges the need for moral courage in supporting DEI, as the current environment can render discussions on these topics sensitive.
The ongoing deregulation related to the Corporate Sustainability Reporting Directive (CSRD) has not clarified the data scarcity issue. While initiatives like the Corporate Sustainability Due Diligence Directive (CSD3) could have offered structured data, the reduced regulatory scope necessitates that firms voluntarily adopt ESG measures. Whelan notes the need for transparency, urging companies that provide data to distinguish themselves in the market.
As organizations become more cautious in the evolving political landscape, Whelan predicts that ESG will continue to grow as a critical risk management tool, particularly as younger demographics prioritize aligning investments with their values.
On the topic of artificial intelligence (AI), Whelan asserts that for AI to significantly impact ESG investing, it requires accurate data. Concerns surrounding trust, governance, and ethics in AI remain unresolved, and integrating AI responsibly within ESG frameworks is essential. He outlines a gradual evolution in AI, emphasizing that trust and reliability must develop alongside the technology rather than expecting a sudden revolution.