IMD & IRD Awards 2022 Winners' Circle: FactSet

The importance of openness and a problem of choice

Jonathan Reeve, FactSet
Jonathan Reeve, FactSet

FactSet won the two highest profile data categories in this year’s Inside Market Data and Inside Reference Data Awards: best ESG data provider and best alternative data provider. WatersTechnology chats to FactSet’s Jonathan Reeve about the challenges facing market participants with respect to alt data, the prevalence of greenwashing in the ESG data realm, and what FactSet has in store for the foreseeable future. 

WatersTechnology: The two most competitive data categories of this year’s IMD and IRD Awards were those of best ESG data provider and best alternative data provider, both of which were won by FactSet. What it is about the firm that you believe sets it apart from other data providers?
Jonathan Reeve, executive vice president, content technology solutions, FactSet: One of the philosophies around how we offer our services is the concept of being “open.” That has many translations, both from a technology and a data perspective. We produce a lot of data ourselves―we have over 45 global datasets―but the world is thirsty for content and makes investment decisions based on data beyond what we provide. In this respect, we bring together data from more than 80 providers through the Open:FactSet Marketplace. We then connect that data using our concordance service so that customers can easily analyze any third-party data on a given company alongside our own. If you speak to any quant or research analyst, most of their time is spent wrangling data. From a technology perspective, we offer our data through a number of technologies, including data feeds, APIs and, increasingly, cloud providers. 

WatersTechnology: One of the challenges facing market participants is understanding what their data is telling them. To what extent is this on FactSet’s Radar and how are you helping clients in this regard? 
Reeve: We provide thought leadership along with our content. What that means in practice is that we provide research papers on what we think the data is telling us, which can then spark ideas in our customers’ minds. When we can tell a story about how FactSet data complements third-party data and vice-versa, it helps our clients know what to do with the content.

WatersTechnology: What do you see as the challenges your clients are facing right now with respect to alternative data?
Reeve:
The real problem is one of choice―there is so much data out there. Alternative data can mean just about anything. If you’re an investment manager or quant researcher, how do you decide and prioritize which of this broad universe of data to look at? So this concept of choice is a challenge. What we do with the Open:FactSet Marketplace is make some of those decisions [for them] and find alternative data that can actually be useful in investment decisions. We then link it, provide thought leadership [around it], and narrow down the choices, because unless you have unlimited resources, it’s too big a task [to manage in-house].  

WatersTechnology: Greenwashing is a big issue especially when it comes to ESG data. To what extent is greenwashing on FactSet’s radar and how is FactSet helping to provide increased levels of accuracy and transparency into the ESG data it is collecting and distributing?
Reeve: The greenwashing issue speaks directly to our ESG strategy, which we see as a differentiator. Most of the ESG content in the marketplace is self-reported―fundamental data that’s self-declared by a company, which we refer to as “inside-out” content. FactSet acquired Truvalue Labs for what it can do using AI around “outside-in” content. Essentially, we use AI to scour thousands of sources on the internet for news stories about a particular company that are not self-reported by the company.

We then produce scores on that so that what we have is a combination of outside-in and inside-out data, which users can now contrast. An example of that would be a certain manufacturing company that had a self-declared AAA score through one of the other ESG data providers. However, when we scoured various news sources, we found that it had been charged with dumping chemicals in a number of counties in the Northeastern US. So, from an outside-in perspective it got a much lower score. That is FactSet’s solution to greenwashing―you must look at much more that what a company self-declares.

WatersTechnology: What’s on your immediate radar from an alt and ESG data perspective? Anything exciting you are working on right now?
Reeve: The world is no longer just looking at the public universe―private companies are an important part of the future. When we can provide all our content―fundamentals, ESG data or financials on private companies―through our various channels, customers can compare and contrast the public universe with the private universe. That’s at the heart of what we’re trying to do. We’re also working on making our data more readily available in emerging cloud technologies, expanding our ESG coverage, and building out our deep-sector content to have more meaningful operating statistics by industry.

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