The combination of artificial intelligence, impending regulation, and shifting market dynamics is shaking up the traditionally opaque sector of ESG data providers.
One sign of the changing times is that Econopolis Invest, a fund managed by the Antwerp-based wealth manager of the same name, is replacing established provider Sustainalytics with Clarity AI for its ESG risk assessments.
The New York–based technology platform claims that artificial intelligence drastically accelerates the processing of ESG-related information, providing immediate alerts whenever new data on a company’s sustainability aspects becomes available.
“Our AI assistant provides real-time factual insights into key dimensions, such as a company’s sustainability policy, climate transition plans, ESG risks, and any potential controversies surrounding the firm,” said the data provider.
Sustainalytics, meanwhile, is under pressure. Revenue declined by 6.5 percent in the first quarter compared to a year earlier, falling to 28.8 million dollars, according to the latest quarterly report from parent company Morningstar. News site Responsible Investor reports that dozens of jobs at Sustainalytics are at risk.
Reevaluation underway
Econopolis is not an isolated case. Other players in the Benelux region have also recently chosen Clarity AI as their ESG data provider, said Juan Diego Martin, chief revenue officer at the data company, without naming specific clients.
“This momentum is part of a broader global trend,” he explained. “Across markets, more and more asset managers are reevaluating their ESG data providers in response to changing regulatory demands, rising expectations around the use of technology, and the need for scalability.”
“It’s important to note that these shifts go beyond simply swapping one provider for another. Firms are seeking long-term partners capable of keeping pace with a rapidly evolving landscape and regulatory framework.”
Meanwhile in Brussels
Currently, providing ESG data is not yet a regulated activity at the European level. But that is about to change. Last year, the EU initiated the legislative process for new regulations aimed at bringing greater clarity to the ESG data provider maze and standardizing their reporting.
ESMA, the European Securities and Markets Authority, will play a key supervisory role and will also issue European licenses. The regulatory body is currently conducting an EU-wide market consultation to gather industry feedback. The goal is to present the main outlines of the new regulatory framework by October 2, 2025.
In terms of data, the aim is to improve the comparability of ESG ratings (across different providers). To strengthen the integrity of data providers, new rules will seek to eliminate conflicts of interest. Under the proposed regulations, ESG data providers will not be allowed to offer investment advice or other financial services. Lending and credit rating activities will also be prohibited.
Currently, several ESG data providers are affiliated with credit rating agencies (such as S&P Global and Moody’s) or large financial data firms (like Bloomberg, MSCI, and LSEG). The upcoming EU regulations are therefore expected to lead to the creation of separate entities or strict Chinese walls to prevent conflicts of interest.
Chart: The role of ESG data providers (mind the ESG Gaps, Fichtner & Co., 2023)
Transparency
Clarity AI anticipates that the shift toward greater transparency in ESG data provision will go hand in hand with consolidation in the ESG data market. Generalist providers, unwilling to make the necessary technological investments, are expected to exit the increasingly specialized sector.
“Companies increasingly prefer data solutions that offer full transparency into data sources, scoring methodologies, and the rationale behind ratings, allowing them to clearly communicate their ESG positioning to both asset owners and regulators,” Martin says.
“We believe the ESG data market is moving away from static, analyst-driven reports toward more flexible, AI-based platforms. In today’s competitive environment—where margins are thin and operational efficiency is critical—asset managers need tools that streamline workflows, reduce costs, and integrate easily into existing systems.”