A powerful combination of artificial intelligence, looming regulation and shifting market dynamics is shaking up the opaque world of ESG data providers.
One sign of the changing times is the decision by Econopolis Invest, a fund managed by the Antwerp-based wealth manager of the same name, to switch from established player Sustainalytics to Clarity AI for its ESG risk assessments.
Clarity AI, a New York-based tech platform, says its artificial intelligence technology enables faster ESG data processing, including real-time alerts when sustainability-related disclosures emerge. The platform organises information across key themes such as sustainability policies, transition planning, and regulatory risks.
Pressure on Sustainalytics
Sustainalytics, a subsidiary of data provider Morningstar, is under pressure. According to Morningstar’s latest quarterly earnings report, revenue at the ESG data provider fell by 6.5 percent year-on-year in the first quarter, to 28.8 million dollars. Industry publication Responsible Investor has reported that dozens of jobs are at risk.
Econopolis is not an isolated case. Several other Benelux-based players have recently chosen Clarity AI as their ESG data provider, said Juan Diego Martin, chief revenue officer at Clarity AI, who declined to name specific clients.
“This is part of a broader global shift,” he explained. “Across markets, asset managers are re-evaluating their ESG data providers in response to evolving regulatory requirements, rising expectations around technology, and the need to scale up.”
This is not simply a provider switch, Martin stressed. Firms are looking for data partners that can adapt to changing regulatory and market conditions.
Brussels moves toward regulation
Providing ESG data is not currently a regulated activity at European level, but that is set to change. In 2024, the European Union launched a legislative process to bring clarity to the ESG data ecosystem and introduce more standardised reporting requirements.
The European Securities and Markets Authority (ESMA) is expected to play a central supervisory role and will issue licences for ESG data providers. ESMA is currently conducting a public consultation to gather feedback from the industry, with the aim of presenting a new regulatory framework by 2 October 2025.
The ambition is to improve the comparability of ESG ratings from different data providers and to enhance the integrity of providers themselves. Draft texts include safeguards to prevent conflicts of interest—for instance, ESG data providers would be prohibited from offering investment advice or other financial services, such as lending or credit ratings.
That could have consequences for large ESG data providers affiliated with financial data conglomerates. These include S&P Global, Moody’s, Bloomberg, MSCI and LSEG. The upcoming rules may force them to create separate legal entities or erect strict internal Chinese walls.
Dutch asset manager Robeco said it strongly supports the introduction of professional standards for ESG rating providers.
“These rules will enhance transparency and reduce due diligence costs for investors,” it said in an email. “That said, it’s essential for regulators to strike the right balance between better disclosure and implementation costs. Investment managers are already facing fee pressure and need compliance requirements to deliver real value—not just more expensive documentation.”
Transparency and consolidation
Looking ahead, Clarity AI expects the push for greater transparency to trigger consolidation in the ESG data market, as generalist providers withdraw rather than commit to the required technology investments in an increasingly specialised space.
Martin said asset managers are seeking data solutions with transparent methodologies and traceable sources so they can justify ESG assessments to asset owners and regulators more effectively.
He added that the ESG data market is evolving from static reporting toward dynamic platforms that integrate with asset managers’ existing systems and workflows.