The Enhanced Analytics Initiative (EAI), an alliance of asset owners and managers who collectively represent more than 1.9 trillion (US$ 2.6 trillion) in assets, commissioned onValues to produce a case study of the quality of investment research on mergers and acquisitions (M&A). The study investigated whether research providers covering M&A transactions are addressing the full range of issues that may be material to long-term investors. Depending on the type of M&A activity, these issues might include the impact of combining different corporate governance regimes and corporate cultures, the role of management, potential impacts on intangible assets, and environmental liabilities acquired in a transaction. The study's main conclusions are presented in the public summary report below
Summary report on EAI case study
The survey per end of December of 2006 shows an impressive increase in the size of this market compared to the previous year (17.9 billion compared to 10.6 billion CHF). The survey covered 21 providers and different investment products and services (funds, mandates, structured products). The growth in volume of ESG-inclusive funds in 2006 (+55.7%) was more than five times as big as the growth of the overall Swiss fund market. An increasing interest by private banking clients and the growing demand for structured products and funds dedicated to sustainable themes, such as alternative energy and water, were seen as being main drivers for this development.
In the latest edition of the Environmental Finance magazine, Gordon Hagart and Ivo Knoepfel provide an overview and assessment of current trends in the ESG-inclusive investment field. More sophisticated applications of environmental, social and governance (ESG) information to a wider range of asset classes and financial products could mean that in future ESG issues increasingly become drivers of financial product innovation rather than niche concerns, argue the authors.
Environmental Finance article
The Enhanced Analytics Initiative (EAI) yesterday announced the results of its latest evaluation of investment research providers, which is based on analysis provided by onValues. On the eve of its second anniversary, the Initiative has seen a surge in new members in the past months and now represents total assets under management of €1.8 trillion. The EAI is an international collaboration between asset owners and asset managers aimed at encouraging better investment research, in particular research that takes account of the impact of extra-financial issues on long-term investment. The EAI incentivises research providers to provide better analysis of extra financial issues within mainstream research.
For further information on EAI: http://www.enhanced-analytics.com
Three of the most influential climate policy and economics research institutions – the ‹Potsdam Institute for Climate Impact Research›, ‹Germanwatch› and the ‹Deutsches Institut für Wirtschaftsforschung› (DIW) – have launched a multi-year research programme on the risks (and opportunities) that climate change and carbon mitigation strategies are expected to pose to the financial industry. onValues is part of the consortium and will contribute dedicated research and support. As part of a first set of research tasks, onValues has assessed the way in which sell-side investment research is dealing with these aspects and developed a conceptual framework through which carbon and climate risks could better be factored into current stock valuation models. Special attention was dedicated to dealing with the intrinsic uncertainty related to these aspects.
onValues contributed to the organisation of an event on 10 November 2006 at the Palais des Nations (the United Nations Office at Geneva) that discussed expanding the range of ESG-inclusive investment strategies offered by private banks. The meeting, which was hosted by the United Nations Environment Programme Finance Initiative (UNEP FI), assembled senior executives from a range of international private banking institutions. The challenges of improving ESG-inclusive investment services for private clients are detailed in a UNEP FI publication prepared by onValues, which can be downloaded below.
«Unlocking Value: The scope for environmental, social and governance issues in private banking»
For further information on UNEP FI: http://www.unepfi.org
For the third year in a row, onValues is organising a closed-door meeting of over 50 financial institutions leading the integration of environmental, social and governance (ESG) issues in investment processes and research. This year’s event will examine the communication of financially-material ESG issues at the interface between companies and financial analysts. Confirmed corporate participants include senior representatives of BASF, BT, Hoffmann-La Roche, Holcim, Nestlé, Rio Tinto and Shell. Financial services sector participants include CEOs / CIOs from asset owners and managers and Heads of Research from the sell side. The event is co-sponsored by the Federal Department of Foreign Affairs, the International Finance Corporation and the UN Global Compact.
Download the report
«Communicating ESG Value Drivers at the Company-Investor Interface»
In a recent article published by the leading Swiss financial newspaper Neue Zürcher Zeitung, Peter Zollinger from SustainAbility and Ivo Knoepfel from onValues analyse current trends pointing to a more active ownership approach by large asset owners, namely pension funds. Initiatives such as the Principles for Responsible Investment and the Enhanced Analytics Initiative are described. onValues is increasingly supporting clients in this field, e.g. on issues related to exercising equity voting rights and active engagement with companies.
Neue Zürcher Zeitung article (in German)
For further information about: onValues Active Ownership services
In June 2006 onValues coordinated a workshop on behalf of Mistra, The Foundation for Strategic Environmental Research, on the integration of environmental, social and governance
(ESG) issues into fixed income investment. The workshop was stimulated by the apparent mismatch between the research devoted to understanding the financial impacts of ESG issues in the fixed income domain and that in equities (in a climate of large and growing allocations to fixed income asset classes by institutional investors).
The key questions posed by the half-day workshop were as follows:
- What is the state of the art in the integration of ESG issues into investment research and asset management in corporate fixed income securities?
- What are the current approaches to ESG issues for investors in non-corporate debt?
- How can fixed income investors benefit from the 'head start' of equity investors in this domain? In which areas might their investment decisions differ?
- What possibilities exist for fixed income investors to engage with investee companies and other issuers of debt?
- How can academic research support the work of industry practitioners in this field?
Please find the outcomes of the workshop on the Mistra website by downloading the following document:
«Sustaining interest – Outcomes of a Mistra workshop on environmental, social and governance (ESG) issues in fixed income investment»