Upright Targets CSRD Data to Support Investors, Firms
Dataset covering 50,000 companies looks to offer better impact and risk information to investors, policymakers and the public.
Impact data company the Upright Project will provide investors and corporates with double materiality assessments through a new dataset, launched amid confusion caused by the European Commission’s (EC) omnibus proposal.
The Helsinki-based data provider’s database covers 50,000 companies and has the objective of supplying the double materiality assessments required under the Corporate Sustainability Reporting Directive (CSRD).
Double materiality requires firms to report not only on ESG-related risks to their enterprise value, but also on the impact that they have on society and the environment. This is widely seen as a cornerstone of CSRD, which was adopted in 2022, mandating comprehensive ESG disclosures to enhance accountability across the corporate sector.
The omnibus proposes to significantly reduce the scope of the CSRD. It was initially intended that 50,000 companies would have eventually been mandated to publish CSRD reports, but under the latest proposal this number has been reduced to the approximately 11,700 large companies across EU member states already subject to the Non-Financial Reporting Directive.
“There’s a consensus that reducing the CSRD’s scope will put more emphasis on third-party data, but the need for understanding impacts, risks and opportunities driven by sustainability isn’t going anywhere,” Valtteri Vulkko, Chief Operating Officer at Upright, told ESG Investor.
“Originally one of the CSRD’s main goals was to provide better data on impact, risk and opportunities to investors, policymakers and the public, so that need is still there,” he added. “The complication is that instead of having this data disclosed for 50,000 companies in the next three years, we will have it disclosed for roughly 10,000 companies and that is where Upright is stepping in.”
Impact information for investors
Upright’s dataset covers 50,000 companies from launch and is not dependent on companies’ CSRD reports. The new tool provides an automated data engine to assess double materiality at scale, and it is already being leveraged by Euro Stoxx 50 companies, unlisted SMEs, and some of the world’s largest financial institutions.
The tool allows companies to benchmark material impacts, risks, and opportunities compared to their peers, while investors can integrate structured data in portfolio management rather than relying on subjective ESG surveys.
Founded in 2017, Vulkko said Upright’s objective is to “understand how different types of companies impact the world around us“, with the company developing a “hardcore model to quantify th[at] impact”.
The new dataset is supported by the firm’s eight years of development in impact measurement using large language model technologies. The core feature of Upright’s proprietary data engine is assessing companies’ impacts and resulting risks and opportunities based on the products and services they sell, drawing impact and product information from over 300 million scientific articles, public databases, and company-disclosed data.
“The groundwork we’ve been implementing over the last eight years has enabled us to launch the tool last week,” said Vulkko. “The two building blocks of our core data model and the platform. These form the database.”
Upright quantifies the positive and negative impacts of more than 50,000 businesses, 35,000 funds and 150,000 different product and service categories on topics including the environment, human health, knowledge and society. It has more than 300 businesses and investors users of its science-based data – including APG, EQT, the European Investment Bank, Orkla, Pictet and Swarovski – to comply with regulation and bolster transparency over ESG and sustainability.
“The data is not there, and that’s the gap we’re filling, bringing scalable, comparable data on all these double materiality issues, including sustainability, risks and opportunities available for investors into a numerical format,” said Vulkko.
Morningstar’s Voice of the Asset Owner Survey 2024 underscored the need for ESG data, with 43% pointing to this as being most useful for their investment strategies, ahead of ESG ratings (24%) and indexes (23%).
Some have suggested that the omnibus risks drastically reducing the availability, quantity and reliability of sustainability data, removing approximately 80% of companies from the scope of CSRD and mandatory reporting. A statement signed by 362 civil society organisations warned that the EC’s CSRD proposal would significantly reduce the availability and reliability of sustainability data.
There were also rumours last month that double materiality might be completely scrapped by the omnibus, with some businesses calling for this, but the EC’s official proposal makes clear that a shift to single materiality is not currently under consideration.
“While the EU has typically raced to catch up with global competitors in technological innovation, they are not doing that in sustainability reporting,” said Annu Nieminen, CEO at Upright. “The recent Omnibus package focuses on reductions – fewer companies, fewer requirements – while billions of euros from governance costs could also be cut by accelerating technology-enabled efficiency in reporting. CSRD’s vision for comparable, decision-useful double materiality data wasn’t flawed – the execution was.”
Daniel Lobo, who joined Upright as Vice President, Investor Sales earlier this month, pointed to private markets data provider Preqin predicting private assets will hit US$30 trillion by 2030. Preqin was acquired by BlackRock earlier this month, with BlackRock’s Chief Operating Officer noting that better data is needed to drive investment decisions, manage risk, and construct portfolios.
Lobo said that the growth in size of the private assets market will be “driven by asset managers who can charge more for private asset funds and asset owners who need that long term value creation for their portfolios”. He added that the demand will “not be altered by the omnibus.”
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