June 23, 2018
10.12.2010 - 10:59PM
By CSRwire Contributing Writer Elaine Cohen
Investors and analysts have access to more Environmental, Social and Governance (ESG) information than ever before to help make informed investment decisions. But do they really know how to use it?
SustainabilityHQ™ enters the long line of commercial platforms that aim to support investors and corporate leaders navigate the sustainability maze. With sustainability being the new blue-eyed boy of investment circles and bandwith practically exploding with sustainability data bytes, SustainabilityHQ promises to be "the headquarters for knowledge about sustainability and ESG issues," according to Hank Boerner, Chairman of The Governance & Accountability Institute, Inc., a knowledge center providing resources to leaders across private, social, institutional and public sectors. The G&A Institute owns the SustainabilityHQ platform that was launched last month. I took a look around the site.
SustainabilityHQ collates and classifies information from "literally thousands" of sources and provides profiles on the movers and shakers in everything to do with sustainable investing. This includes profiles of key people and organizations any investment analyst, investor or asset fund manager needs to know; real-time news updates on all things related to SRI; and even a custom Tweet stream on each page, grouped by relevant hashtags. If you are on the profile page of, for example, the think-tank AccountAbility, you can follow a Twitter pulse stream with the hashtag #AA1000, as well as stream news related to AccountAbility, along with reports, research, media coverage and a lot more.
The SustainabilityHQ site is divided into four sections:
ESG and Sustainability - an overview of the sector with profiles of sustainability influencers, creates frameworks and shapes markets by providing third-party services for investors. Examples include: ESG influencers, such as Covalence, Ecofact AG, the Financial Crisis Inquiry Commission, RepRisk, Reputex and Maplecroft; a full list of ESG stock indices, investment banks, credit and risk rating agencies, investor coalitions such as Investors against Genocide and more.
US Public Pension Funds - a U.S. state-by-state view of state and municipal pension and retirement systems, with an estimated USD$2 trillion in assets under management. This section includes profiles of the different funds available including the Florida Retirement System Pension Plan, New York City Comptroller's Office: Bureau of Asset Management and many more.
Sovereign Wealth Funds - a round-the-globe resource for what is happening in different countries with regard to sovereign investing, a rapidly-growing sector of the global capital markets, estimated at over USD$3 trillion in assets. Profiles of SWF's include the Mumtalakat Holding Company of Bahrain with a $USD 14 billion asset base, Pula Fund in Botswana with $USD7 billion and the mammoth Kuwait Investment Authority with $USD 200 - 250 billion in assets. Each fund is profiled in detail and supported by relevant news items.
Asset Managers - a range of investment management entities adopting sustainability guidelines and shaping market trends, includes SRI investment groups and global investment powerhouses such as Goldman Sachs, Sam Group, Credit Suisse and many more.
Together these four sections provide in one Web location much of the up-to-date information anyone might want relating to SRI. SRI is clearly on the agenda. Ethical Corporation's US Briefing this month points out: "In 2007, the Social Investment Forum identified more than $2.7tn in professionally managed US portfolios using sustainable and responsible investing. This was a 324% increase from 1995 and represented 11% of the total assets under professional management." Not only this, but a recent research paper coming out of Arizona and Hong Kong Universities proves the cost of equity capital decreases for firms with superior CSR performance and that these firms attract dedicated institutional investors and analyst coverage.
Yet coverage is one thing, information is another; and, using information wisely to make better decisions is something else altogether. Corporate ESG disclosures are still somewhat obtuse insofar as how they relate to financial performance. I am still waiting to see the ultimate research paper that demonstrates the results of how investors and analysts use the wealth of information that is now available. At what level and in what way is sustainability information input being turned into investment decision output? Even the 172 page document of the European Federation of Financial Analysts, which defines ESG key performance indicators for the purpose of corporate valuation, does not provide guidelines on how to actually use the information provided. Beyond SustainabilityHQ being a tremendously useful and nice-to-have resource, what confidence can we have that those making the decisions will make the effort to consult its content, understand it and use it to make informed investment decisions? How are analysts able to appreciate the context in which corporate ESG data is presented? Hank Boerner responds: "Investors who want to know more about specific companies will find news, commentary, research and other information about many public companies (in all regions) on SHQ. Corporate managers benefit from knowing what we call 'capital market players' and 'influentials' (not necessary directly affecting markets) are saying and doing about their companies. Two outcomes may be affected by these actions - share price valuation, and corporation reputations (which of course affects valuation). So all of this may influence investment decision-making. Sometimes the impact of share price is very slow, but often steady, and share prices can erode as the company and investor views diverge."
The SustainabilityHQ offers a wealth of information, which despite its clear focus, may still be too much for the decision-makers to absorb. Nevertheless, with trillions of funds at stake and the future quality of life and integrity of the planet, one has to be on the sustainability highway, even if not entirely familiar with all the road signs.
About Elaine Cohen
Elaine Cohen is a Sustainability Consultant and Reporter at Beyond Business and blogger on sustainability reporting and author of CSR for HR: A necessary business partnership to advance responsible business practices.
This commentary is written by a valued member of the CSRwire contributing writers' community and expresses this author's views alone.
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