Sustainable Investment Awards 2019

By Peter Cripps

Best ESG Research; ESG Engagement Initiative of the Year; Best ESG data provider for investors (Joint winner) - Sustainalytics

Michael JantziESG research and ratings provider Sustainalytics scooped two of the Sustainable Investment Awards outright and shared a third with GRESB.

"One of the leaders in ESG ratings, with a noticeably collaborative approach, supporting research to demonstrate the value of ESG integration," is how the judges saw Sustainalytics' contribution to the field.

Michael Jantzi, the Toronto-based CEO put his team's success down to its close attention to the market and sticking to data that is relevant for companies and investors.

"We've benefited from understanding what the market is looking for, the key materiality issues and how they're managing those things," he said.

"With the ESG Risk Ratings, the analytical approach we took – focusing on materiality issues and evaluating the exposure issuers have to key ESG risks and how they're managing those things and helping clients look forward rather than backwards – has really resonated with the market."

Sustainalytics argues that with its new ratings approach it has moved from a one-dimensional focus on ESG management to a model that also allows it to compare ESG profiles of companies across all sectors of the economy using a single metric.

"That reflects the maturing of the industry," added Jantzi. "The conversation used to be really about inputs and what we've seen over the last five years is a maturing of the conversation to focus on outcomes – which is what investment is all about. It's really helping inform our clients about the outcome of their decisions."

This focus on client outcomes was very well received by the judges who praised the "evidence of outperformance and focus on how people will positively use the data".

The past year also saw Sustainalytics significantly increase the size of its workforce, particularly on the technology side, where it has grown the team to approximately 100. Jantzi feels this is an area where it's been able to differentiate itself from others in the field.

"Having strong research content and analysts is important but then to be able to work through the analytical challenges and create leading edge technology solutions, which is ultimately responsible for delivering to the clients in a way that is most useful to them, takes scale and resources. We've been able to build scale in that area greater than, maybe, some of the competition," he said.

This growth has seen Sustainalytics expand its corporate research to cover more than 17,000 publicly traded companies and offering performance assessments on more than 120 ESG indicators. In addition to its corporate ESG data, the firm also produces carbon analytics, research into involvement in controversial products, sustainable development analysis, incidents monitoring and country-level ESG research. It is also a major provider of second party opinions in the fast-growing green bond market.

In addition, Sustainalytics has also launched a three-year 'Stewardship and Risk' engagement on Plastics and the Circular Economy on behalf of three institutional investors.

"Plastics is another example of us bringing our ear to the market, listening and the evolvement of the market," said Jantzi. The project was launched this year and is based on the Ellen MacArthur Foundation's (EMF) New Plastics Economy Thinking initiative.

"It's great to see the EMF's ground-breaking work on the circular economy being used as the basis for this constructive dialogue. Despite its early days, this engagement initiative stands out for its potential for further expansion across sectors," said the judges.

Initially the engagement is targeted at 21 companies across the automotive, electronics, and consumer and packaging sectors but Sustainalytics hopes to expand the programme after the initial three years.