Green Profits: How SG Analytics Helps Clients Incorporate ESG Factors for Sustainable Investments and Asset Management

SGA APPROACH

• Organized a dedicated team comprising subject matter specialists across 25 unique sectors, including domains, such as Healthcare, Chemicals, Transportation, Resources, Software, and others. The research scope covered global entities, spanning over 10,000 companies worldwide.
• Collaborated with the client to clearly define the ESG criteria to specifically screen for. Defined thresholds or tolerance levels for each ESG aspect and categorized the company's activities and revenues according to the predefined ESG criteria, such as involvement in tobacco, arms, alcohol, etc.
• Proficiently identified and classified 45 varied controversial indicators into different categories, such as governance practices, pollution, discriminatory, and anti-competitive behaviors, among others. Moreover, these controversies were methodically sorted based on whether they were recent occurrences or had been previously addressed.
• Gathered relevant information from both internal and external sources. Internal data was from the company's financial reports, sustainability reports, and other disclosures. External data was collected from news sources, regulatory reports, and industry reports.
• Systematically conducted in-depth research to precisely pinpoint cases where companies were involved in actions contradicting ESG principles. This process involved utilizing a variety of reputable external sources and the company's disclosures.
• Provided thorough evaluations and informative summaries of contentious incidents. This encompassed closely examining the event’s credibility, measuring the scope of the controversy’s influence, evaluating the company's engagement level in the controversial incident, and assessing the impact based on pre-determined guidelines.
• Prioritized SDGs based on their significance to the companies' industries and business models and categorized the companies' activities based on their relevance to specific SDGs, including identifying activities that are directly aligned with certain goals and others that might have indirect contributions.
• Implemented a system for ongoing monitoring and regular updates to ensure that the company's activities and revenues remain aligned with the pre-defined ESG principles.

ENGAGEMENT

Meticulously researching the implications of the company’s products within the context of negative screening themes. Thoroughly delving into the company’s engagement in global controversies, both directly and indirectly. Conducting a comprehensive examination of the company's ESG/Sustainability Reporting in relation to its alignment with the SDGs.

BENEFITS & OUTCOME

• Streamlined the process of identifying the company's associations with unfavorable themes and evaluated revenue generated through the implementation of product screening and exclusion criteria. 
• Focused efforts on minimizing the potential for unreliable data collection and reporting discrepancies through rigorous monitoring of reported data, aligning it with the company's direct disclosures. 
• Shed light on the key initiatives aimed at risk mitigation undertaken by the companies.
• Provided valuable insights into the company's commitment to its ESG obligations. This assistance could empower investors to make informed decisions about their investment selections.
• Enhanced and enriched research perspectives concerning the alignment of the company's business operations with SDGs.

KEY TAKEAWAYS

• Holistic ESG Understanding: The engagement provided a holistic understanding of the companies’ ESG activities, encompassing positive and negative aspects. This in-depth analysis allowed the client to develop a well-rounded view of the companies’ overall sustainability performance to accurately assess, rate, rank, and categorize the companies.
• Risk Mitigation and Controversy Awareness: Through ESG negative screening and controversy assessment, the engagement illuminated potential risks and controversies associated with the companies' operations.
• Positive Impact Identification: The SDG alignment component showcased the positive impacts that companies were making toward global sustainability goals. This allowed the client to highlight the companies that were actively contributing to a more sustainable world, enhancing the companies’ reputations and attractiveness to socially conscious investors.
• Industry Insights: The engagement offered valuable industry insights by comparing companies' ESG performance and SDG alignment within their respective sectors. This allowed the client to identify sector-specific trends and best practices.
• Enhanced Investment Decisions: The insights gained from ESG negative screening and controversy assessment empowered investors to make informed investment decisions. They could avoid companies with concerning ESG practices and controversies, leading to more sustainable investment choices.