Integrate your own sustainability score into analysis and reporting
This article was adapted from an FFM that appeared first on the Bloomberg Terminal. Existing subscribers can access the full version on Terminal here.
Background
Businesses today must address environmental, social and governance issues head-on, or risk suffering criticism and business risk from consumers and money managers alike.
Investment around green and ESG issues has grown alongside awareness. Regulators have taken notice, with the EU showing interest in regulating green investments and the U.S. Securities and Exchange Commission inquiring about ESG funds.
The issue
Environmental, social and governance issues are becoming increasingly measurable, and that data is being taken into account by the world’s largest investors, including many who have joined the Net-Zero Asset Owner Alliance.
Elsewhere, some mutual funds are acting more like hedge funds in shorting poor ESG performers. “There are a lot fewer companies that have good solutions than don’t,” says Joe Mares, formerly of hedge fund manager Greg Coffey. “There are plenty of companies out there that we think could be interesting on the short side.”
Then there’s investment driven by positives. Morningstar data suggests funds that account for ESG are outperforming those that don’t. Hedge funds are increasingly interested in ESG-related investing, while some asset managers see ESG as a differentiator that encourages active investing.
“We think we’ll move toward a different economic model. We call it Clic — clean, lean, inclusive, circular,” says Hubert Keller, head of Lombard Odier & Co.’s asset-management business.
Tracking and analyzing ESG performance
Bloomberg functionality offers users the opportunity to find ESG scores by company ticker, with such offerings as the Bloomberg ESG Disclosure score. Users can also upload their own data using the Custom Data Editor and create and share individualized reporting. The Bloomberg Professional Service contains publicly disclosed ESG data on over 11,500 companies and content from multiple third-party ESG providers.
