CAMRADATA starts to screen major indices for ESG factors

Global investment data provider CAMRADATA is starting to screen the companies included in major equity indices for environmental, social and governance (ESG) factors, and comparing them to scores for more than 1,000 other companies across the world.

ESG Geographic Portfolio Analysis is based on a geographic breakdown of sales revenue, assets and operating income of more than 4,000 companies.

This is combined with assessments of 214 countries (grouped into 54 world regions) according to 172 underlying ESG risk indicators relating to environment, social and governance factors.

These fall under 28 themes ranging from climate change and water scarcity to health issues, corruption, and democratic life, based on risk evaluation data from diverse independent sources including the United Nations and the International Monetary Fund.

Investors can request reports that identify types of risk by country, industry sector, or even by company. Europe heads the top ten regions for overall ESG scoring while Africa has the lowest overall ESG score. On environmental scoring, Latin America’s results are the highest, with Africa the lowest.

The first index analysis is the FTSE100. Findings suggest component companies are less exposed to potential environmental issues such as pollution and water scarcity than the 1,000-plus companies in the comparative “world index”.

But the FTSE 100 is more exposed to social and governance issues, with lower scores for a list of factors ranging from education and economic inequality to corruption and business rights.

This can be attributed to the global reach of the companies’ commercial operations, CAMRADATA said. Although 94.4% of company holdings were in the UK only 17.5%of sales revenue was UK-based. This indicates that the 76.9% of sales elsewhere could potentially be exposed to ESG risks.

The analysis also reveals the top ten highest-scoring companies and top ten lowest across environmental, social and governance themes. Based on the disclosed geographic footprint of the companies within the FTSE 100, one of the least ESG-exposed companies is Hargreaves Lansdown, and one of the most exposed is Rangold.

The work also highlights where the FTSE 100 has scored higher than the world index – in energy efficiency (environmental), employment (social) and financial stability (governance). The FTSE 100 scored lower than the world index on water infrastructure needs (environmental), security issues (social) and business rights (governance)

CAMRADATA founder and managing director Steve Butler said: “Institutional investors are demanding more credible data on ESG risks to their portfolio.”

For the full report, click here:


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