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AB: PRISM - Unlocking the Power of ESG Data
AB: PRISM - Unlocking the Power of ESG Data
Published 09-23-24
Submitted by AllianceBernstein
Kathleen Dumes, CFA| Responsible Investing Research Analyst—Fixed Income Responsible Investing
For a deeper dive into PRISM 3.0, read our paper, Breaking the ESG Barrier: Empowering Credit Investors Through Better and Faster Data.
Transcript
Investors need to integrate financially material ESG risks and opportunities into their portfolios. But that’s no easy matter. Company ESG data, when it exists, can be hard to find and subjective. And there are few global data standards, making apples-to-apples comparisons challenging.
Investors looking to avoid data issues frequently turn to third-party ESG rating providers. Unfortunately, not only is there huge variability in ESG scores provided by third parties, but those scores often look in the rearview mirror, ignoring companies’ commitments and paths forward.
That’s why we’ve developed a new approach to credit research that allows our analysts to capture, objectively analyze and consistently evaluate financially material ESG metrics, turning a data problem into a data-driven solution.
We call this digital ESG scoring platform PRISM 3.0.
PRISM sources nearly 180 metrics from NGOs, governments and third parties.
This data is not only financially material, in our view, but is also clean, to ensure data integrity. That helps minimize human biases and generates more objective company analyses.
PRISM’s resulting ESG scores allow for meaningful comparison of companies, both within industries and across industries. That’s because PRISM doesn’t try to fit the same generic ESG metrics onto all companies. Because different industries are exposed to different environmental and social risks, PRISM looks at industry-relevant metrics to provide more accurate assessments.
For example, when analyzing an airline, looking only at carbon intensity may be misleading. Emissions per passenger-kilometer flown better represent an airline’s ability to be fuel efficient.
Unlike most third-party scorers, PRISM covers 96 to 98% of the universe of investment-grade, high-yield and emerging-market corporate bonds, including small and unlisted companies.
Lastly, PRISM frees up credit analysts’ time, allowing them to focus on targeted engagements* with corporate issuers to gain unique, forward-looking insights—the kind that power active investing.
Ultimately, PRISM puts robust, contextualized ESG data at portfolio managers’ fingertips to enable faster—and better—decision-making for client portfolios.
*AB engages issuers where it believes the engagement is in the best financial interest of its clients.
The views expressed herein do not constitute research, investment advice or trade recommendations and do not necessarily represent the views of all AB portfolio-management teams. Views are subject to revision over time.
Learn more about AB’s approach to responsibility here.
AllianceBernstein
AllianceBernstein
AllianceBernstein (AB) is a leading global investment management firm that offers diversified investment services to institutional investors, individuals, and private wealth clients in major world markets.
To be effective stewards of our clients’ assets, we strive to invest responsibly—assessing, engaging on and integrating material issues, including environmental, social and governance (ESG) considerations into most of our actively managed strategies (approximately 79% of AB’s actively managed assets under management as of December 31, 2024).
Our purpose—to pursue insight that unlocks opportunity—describes the ethos of our firm. Because we are an active investment manager, differentiated insights drive our ability to design innovative investment solutions and help our clients achieve their investment goals. We became a signatory to the Principles for Responsible Investment (PRI) in 2011. This began our journey to formalize our approach to identifying responsible ways to unlock opportunities for our clients through integrating material ESG factors throughout most of our actively managed equity and fixed-income client accounts, funds and strategies. Material ESG factors are important elements in forming insights and in presenting potential risks and opportunities that can affect the performance of the companies and issuers that we invest in and the portfolios that we build. AB also engages issuers when it believes the engagement is in the best financial interest of its clients.
Our values illustrate the behaviors and actions that create our strong culture and enable us to meet our clients' needs. Each value inspires us to be better:
- Invest in One Another: At AB, there’s no “one size fits all” and no mold to break. We celebrate idiosyncrasy and make sure everyone’s voice is heard. We seek and include talented people with diverse skills, abilities and backgrounds, who expand our thinking. A mosaic of perspectives makes us stronger, helping us to nurture enduring relationships and build actionable solutions.
- Strive for Distinctive Knowledge: Intellectual curiosity is in our DNA. We embrace challenging problems and ask tough questions. We don’t settle for easy answers when we seek to understand the world around us—and that’s what makes us better investors and partners to our colleagues and clients. We are independent thinkers who go where the research and data take us. And knowing more isn’t the end of the journey, it’s the start of a deeper conversation.
- Speak with Courage and Conviction: Collegial debate yields conviction, so we challenge one another to think differently. Working together enables us to see all sides of an issue. We stand firmly behind our ideas, and we recognize that the world is dynamic. To keep pace with an ever changing world and industry, we constantly reassess our views and share them with intellectual honesty. Above all, we strive to seek and speak truth to our colleagues, clients and others as a trusted voice of reason.
- Act with Integrity—Always: Although our firm is comprised of multiple businesses, disciplines and individuals, we’re united by our commitment to be strong stewards for our people and our clients. Our fiduciary duty and an ethical mind-set are fundamental to the decisions we make.
As of December 31, 2024, AB had $792B in assets under management, $555B of which were ESG-integrated. Additional information about AB may be found on our website, www.alliancebernstein.com.
Learn more about AB’s approach to responsibility here.
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