07.08.2020

Refinitiv Launches Lipper Fund ESG Scores

Building on its commitment to connect and advance the global financial community through data and analytics, Refinitiv  announced Lipper Fund ESG Scores to serve as a pivotal data-metric in the transition to sustainable investing – providing comparisons at the fund level for fund managers, advisors and investors.

Refinitiv Lipper Fund ESG Scores brings together the Lipper fund universe of 330,000 fund share classes and its deep holdings content, ESG coverage on 9,000+ companies representing over 80% of global market capitalization, and Refinitiv’s proprietary scoring methodology which factors in issues such as materiality and transparency stimulation, to create fund scores on over 19,000 unique portfolios representing $15.7 trillion in total net assets across equity, bonds and mixed funds. The Fund ESG scores are available on Refinitiv Workspace, Eikon or API Feed.

Refinitiv Lipper Fund ESG Scores are designed to transparently and objectively measure ESG performance, commitment and effectiveness across 10 main themes (emissions, environmental product innovation, diversity and inclusion, human rights, shareholders, etc.) based on publicly-reported data on constituents within the fund across the three pillars Environmental, Social and Governance.

David Craig, CEO of Refinitiv, said: “Even as the world addresses the challenges of COVID-19, climate change remains one of the largest global issues impacting communities, food supplies, bio-diversity and economies. It has become imperative for financial markets to address so investors can direct funds to transitionary projects and away from high carbon and carbon-equivalent industries, and to meet an increasing number of regulatory mandates. Sustainable finance isn’t just a political or social choice — it’s a smart business decision. Refinitiv is proud to play its part in encouraging this transition by providing trusted data and analytics to investors, traders and advisors so they can evaluate ESG performance and allocate capital.”

“ESG scores are a uniquely effective way to assess performance across industries, factoring in issues such as materiality and transparency stimulation, and serve as an objective and impartial assessment of the importance of each ESG theme to different industries,” added Craig.

Refinitiv data identifies the ever-increasing levels of assets under management that have a self-identified ESG focus. The variety and style of ESG incorporation is not consistent. Currently it ranges from those that apply negative screening to those with deep ESG integration for risk management purposes, and from models that correlate certain ESG metrics with alpha generation to those focused on measuring impact. When companies add the pressure of regulatory overhang, factoring in ESG considerations is even more critical. Refinitiv believes this new fund scoring capability provides investors with a differentiated asset that offers them a superior route in optimizing capital towards sustainable outcomes.

Refinitiv Lipper ESG Fund Scores incorporate two overall ESG scores in the model:

  • ESG score – measures company’s or fund’s ESG performance based on verifiable reported data in the public domain.
  • ESG combined score – overlays the ESG score with ESG controversies (impact of negative events) to provide a comprehensive evaluation on the company’s sustainability impact and conduct in near real time.

There are three total pillar scores to review how a fund or company performed according to the individual pillars of E, S and G, which are made up of 10 key themes. The approach Refinitiv has taken is to score the fund based on constituent attributes, in a bottom-up methodology, using Refinitiv company ESG data and scores and combining it with the deep holdings data on its global funds universe in Lipper.

Leon Saunders Calvert, Head of Sustainable Finance, Lipper & I&A Insights, Refinitiv, said: “At Refinitiv we are focused on bringing transparency to markets and we believe we have unique assets across Lipper fund holdings, our extensive ESG company coverage and our proprietary scoring methodology. In addition to servicing the ESG expert community we believe we can help mainstream sustainability into the financial markets by delivering meaningful data, analytics and tools to finance professionals, allowing them to incorporate ESG factors more easily into the investment process. The launch of Fund ESG scores is an important step in this process.”

Earlier this year, Refinitiv announced enhancements to its ESG Scoring Methodology to reflect sustainable industry developments and market changes.  In 2019, Refinitiv brought together its ESG Sustainable Investing and Lipper Fund Ratings businesses to increase focus on unearthing links between sustainable business strategies and financial performance.

Wally Okby, Senior Analyst, Aite Group, said: “The benefits of more consistent and transparent ESG data clearly assist investors’ capacity to weave sustainability factors into their investment portfolios, aligned to their social values. With increased demand for ESG and sustainable investing since the onset of COVID-19 observed by about half of wealth management firms in our global ecosystem, the launch of Fund ESG scores is certainly opportune and beneficial at this juncture in time.”

Will Trout, Head of Wealth Management, Celent, said: “Incorporation of quality data is key to realizing the promise of sustainable investing. From a ratings perspective, deep coverage and robust scoring capabilities are a means to stand out.”

Will Jan, VP & Lead Analyst, Outsell, said: “The demand for ESG data in financial services is growing, in response to traders and investors who are seeking top performers in diversity and inclusion, corporate social responsibility, and other factors that contribute to consistent growth in their portfolios. ESG data offer insight into the performance in these areas.”

Refinitiv has been serving the financial industry with ESG data and solutions for over 18 years and offers one of the richest ESG databases in the industry – a fully transparent resource that is trusted by investors and corporates to drive positive impact and provide comprehensive analysis. As members of the UN Global Compact, Refinitiv is part of a community of 9,000+ businesses across 135 countries that are committed to operating with responsible business practices at its core.

Refinitiv ESG data is designed to help investors make sound, sustainable investment decisions, our ESG data covers 80% of global market cap and over 450 metrics. For more information about Refinitiv ESG data, visit https://www.refinitiv.com/en/sustainable-finance/esg-investing

Lipper research provides independent insight to asset managers and institutional investors on global collective investments, including mutual funds, retirement funds, hedge funds, and fund fees and expenses. Lipper offers premium-quality data, fund ratings, analytical tools, and global commentary through specialized product offerings. Trusted by investment professionals for more than 40 years, Lipper provides unparalleled expertise and insight to the funds industry.

Source: Refinitiv

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