Sustainalytics, a leading provider of ESG research, ratings and analytics, today launched its Material Risk Engagement service, which is designed to help investors promote and protect long-term value in their portfolios by engaging with high-risk companies on their financially material ESG issues. Investors can use the service to support their portfolio management, stewardship, ESG integration and proxy voting activities.
Sustainable investing has grown by 38% in the US, and 42% in Canada between 2016 and 2018, and now stands at $13.7tn in assets in North America. In addition, more large mainstream investors in North America are engaging with companies on environmental and social issues such as climate change and human capital, according to the Global Sustainable Investment Alliance and US Forum for Sustainable and Responsible Investment (US SIF). Against this backdrop, investors are facing increased pressure to meet regulations and fulfill stewardship responsibilities, and are looking for additional engagement services to complement their own ESG risk management practices and activities.
Material Risk Engagement service aims to engage with companies in Sustainalytics’ universe with an ESG Risk Ratings score greater than 32, labeled as high or severe risk and within the worst performing half of their industry. Sustainalytics’ Engagement Services team collaborates with investors to address the management gaps within portfolio companies, helping to improve their ESG performance and risk management practices.
“While corporate engagement on ESG issues continues to gain significant momentum among investors, many stewardship teams are faced with engaging on a wide variety of portfolio companies on a diverse set of ESG issues,” said Hanna Roberts, Director of Engagement Services at Sustainalytics. “As an overlay to Sustainalytics’ ESG Risk Ratings, our Material Risk Engagement service complements investors own engagement activities helping them to reduce their portfolio-ESG risks and support their long-term value creation.”
With over 25 engagement professionals across the globe, Sustainalytics supports the world’s leading asset owners and managers to create and protect long-term shareholder value through consistent engagement outcomes. In addition to Material Risk Engagement, Sustainalytics also provides Thematic and Global Standards Engagement services. Thematic Engagement helps investors to proactively address specific ESG issues within their portfolio companies, ranging from climate to child labor and plastics. While Global Standards Engagement helps investors to comply with regulation and/or industry standards by addressing ESG issues that arise in portfolio companies.