ESG Phenomenon: The Ratings Race, Invesco Doubles Down
Developments and commentary in and around the ESG investment space.
ESG Ratings Race
Invesco has just launched an in-house ESG ratings tool for enhancing the integration of environmental, social, and governance factors into all of its investment strategies. Initially the tool, called ESGintel, will be used for products with corporate exposure in Luxembourg, Ireland and the UK; it will include data points and insights for over 8,000 companies.
Competition is intensifying among larger Investment firms with deeper pockets to roll out proprietary enhanced ESG research that goes well beyond negative screening. This reflects investors becoming more sophisticated and engaged, and regulators beginning to insist on wealth managers selling ESG products with sufficient knowledge of their risks and suitability for clients.
The lastest Investment Association figures show that capital into ESG is flourishing so far this year, attracting just over £7 billion compared with £1.9 billion in 2019.
Invesco says that its platform aims to outperform external providers by using "multiple data sources and our ability to include models for companies where no public data or scoring currently exists," The new tool is "a key building block to having a transparent and proprietary viewpoint on ESG for all our holdings,” it added.
Current data sets being used by the group include those from Bloomberg ESG, Sustainalytics’ Controversies, and from climate tools, including the Transition Pathway Initiative management scores (TPI), ISS Carbon Data, Science-Based Targets (SBT) and a carbon disclosure score from CDP. The group says that it is working to add new data sources and significantly expand the number of companies rated before the end of the year.
"Combining our own analysis with different external sources, provides richer insights than simply taking the view of a single external provider," CIO Stephanie Butcher said.