ESG Ratings - Another way to build up and show a portfolio

More and more asset managers are using ESG values to create universes where they can invest in a sustainable and financially efficient way. The inclusion of these factors has proven to be effective in mitigating risks derived from reputational aspects.

There are currently numerous ESG data providers, a summary of each of which is beyond the scope of this post, but some well-known third party ESG report and ratings providers include: Bloomberg ESG Data Service; Corporate Knights Global 100; DowJones Sustainability Index (DJSI); Institutional Shareholder Services; MSCI ESG Research; RepRisk; Sustainalytics Company ESG Reports; and Thomson Reuters ESG Research Data.

From Alembeeks Group we encourage the reading of the following research, published on Harvard Law School Forum, regarding the return on investment in ESG initiatives. It identifies and analyses five pillars of the business case for corporate sustainability:

  1. Corporate investment in ESG enhances market and accounting performance
  2. Corporate investment in ESG lowers the cost of capital
  3. Corporate investment in ESG is a means of engagement with key shareholders
  4. Corporate investment in ESG improves business reputation
  5. Corporate investment in ESG channeled to product innovation fosters new revenue growth

 

Find below an interactive chart showing the ESG scores of each of the companies in a given European Equity portfolio. These values are courtesy of Sustainalytics.