|
Only a decade ago, the idea of a stand-alone firm researching the environmental and social impact of corporate activity would have been dismissed out of hand. Yes, one or two ethical funds did exist, but only as a tiny cog within a large machine.
Today, green investment and, consequently, analysis of green issues is big business. And few organisations have done more to facilitate the change in attitudes than the Enhanced Analytics Initiative (EAI).
An international collaboration between some of the world's largest institutional investors and asset managers, the EAI represents about 1,800 billion euros ($2,659 billion) in assets under management.
Its remit is to encourage sellside research of extra-financial issues, such as political and regulatory risks, the quality of human resources management, governance structures, the environment, corporate ethics and stakeholder relations. EAI runs an evaluation process twice a year to identify the best six brokers for extra-financial research and they receive five per cent of all its members' commissions over the following six months.
EAI chairman Peter Scales says the quantity and quality of research has improved since the organisation was set up three years ago.
Focus
As global warming has moved up the political agenda, the EAI has witnessed a sizeable rise in research on carbon emissions and on climate change, to the extent that it represents the single largest focus of new analysis.
While the EAI operates at big picture level, other research organisations take a closer look at issues that can provide direct investment opportunities.
Asset4, for example, a Swiss-based company, provides corporate-specific information on economic, environmental, social and governance (ESG) issues. Its model is based on the belief that 80 per cent of a company's value is not visible in the financial statements.
Henrik Steffensen, a director of Asset4, which is minority-owned by Goldman Sachs and Merrill Lynch, says: "This does not mean that ESG issues account for 80 per cent of a company's value, but they do represent a significant part of the market capitalisation."
Asset4's database is populated with information from public sources such as annual reports, stock exchange filings, news archives and non-government organisation websites, which can then be sliced and diced by investors to help them make specific investment decisions.
Most clients use a range of information types, but some focus exclusively on environmental issues, particularly when producing thematic reports.
|
