Resource Center

Investors face a unique set of challenges in assessing the physical climate risks affecting their portfolio companies. In this blog discover the direct and indirect physical climate risks impacting companies and their supply chains.

What is impact investing? What is impact-focused investing? In this blog post we unpack impact, how it relates to ESG, and why it’s important to investors.

Discover how leading companies are managing their low carbon transition risks. Using data from the Low Carbon Transition Ratings, we identify the industries with a large portion of the companies with strong management of transition issues and examine the factors contributing to their strong management scores.

Read about the methods investors can use to measure portfolio alignment to net-zero and the importance of not only assessing climate transition plans, but also their governance structure and implementation.

Despite improvements in the quality and quantity of carbon emissions reporting from companies, significant gaps remain. Discover the current state of emissions disclosures, learn the advantages and disadvantages of widely used estimation models, and discover the approach underpinning Sustainalytics' Carbon Emissions Data product.

Many global investors already incorporate ESG factors into their evaluation of public companies across developed markets. We are now observing increasing interest in applying ESG considerations across a broader set of asset classes and regions.

Regulators asking questions about topics central to the EU Action Plan show that more work needs to happen to make this ambitious, first-of-a-kind sustainable finance legislation workable for the market and supervisors and more useful for end investors.

The various interpretations of the sustainable investment definition introduced by the SFDR and leveraged in MiFID II leave many market participants unsettled, having to decide between approaches that have different benefits and limitations in the short to medium term.

As the volume and breadth of ESG risk exposure continue to rise, the stage is set for another momentous proxy season. The trending topics of last year will continue to steer the agenda—with the prospect of even more substantial support from shareholders in 2022.

Living Income is a crucial consideration among leading companies across some sectors and their supplier companies throughout the agricultural and food supply chain. Companies that manage ESG risk in their supply chains, making targeted investments to improve their resilience, are better positioned to build investor confidence.

For observers of the EU’s Sustainable Finance Strategy, 2022 kicked off with a crack and a bang as the European Commission went ahead with plans to include natural gas and nuclear-related activities as potentially sustainable under their ‘Green Taxonomy’. However, in midst of this furor, seemingly less attention has been paid to other components of the regulation that have quietly taken effect from the 1st of January 2022, presenting their own set of challenges.

When companies are receptive to investor feedback, there are clear real-world impacts and positive changes. Such engagement outcomes vary and are directly tied to the company and its company-specific exposure to material ESG issues.

In the weeks following COP26, investors in the UK and worldwide face a myriad of upcoming climate-related regulations heading towards the implementation phase. In addition, major global coalitions such as the Glasgow Financial Alliance for Net Zero have sprung up to attempt to accelerate decarbonization via targeted investment.

In 68% of our engagements, product governance is a significant material ESG issue, but it is our experience that most companies underestimate the materiality of this risk to investors. For some industries, product governance represents on average more than 20% of ESG risk exposure, as identified within our ESG Risk Rating framework.

Reactions to the COP26 Conference and the resulting Glasgow Climate Pact have predictably run the gamut from claims of greenwashing to the celebration of progress in the fight against climate change. Ultimately, any judgement on COP26 may be premature, as the success of the conference will best be measured in time by the extent to which commitments made are put into motion. While we wait to see the concrete actions that materialize, the past two weeks have underscored the importance of several themes that will garner increasing attention and should be considered by sustainable investors.

Investors can examine to what extent petroleum refiners manage their Non-GHG Air Emissions and assess the quality of a company's programs to reduce air pollutants. For instance, examining all the petroleum refiners assessed by Sustainalytics, we observe that only 3% have a strong program to manage non-greenhouse gas emissions.

From a market perspective, engagement and voting on governance issues have been used as levers for influence for a long time. On the other hand, environmental and social issues were historically addressed from a values-based perspective or primarily for fact-finding purposes. Today, many responsible investors leverage corporate dialogue as a tool to influence and drive meaningful change and impact

There are many factors that rating agencies consider within its overall assessment. For example, ESG rating companies tend to look for at least three years of ESG metrics to determine company trends and long-term ESG targets, goals, and strategies to manage and reduce ESG risks at least five years ahead. Read on to learn about how Sustainalytics' Material Risk Engagement program promotes and protects long-term value by engaging with high-risk companies on financially-material ESG issues. (A North American Snapshot)

Pipelines play a critical role in the U.S energy infrastructure transporting natural gas, crude oil, natural gas liquids, petroleum, and petrochemical products. While these pipelines play a vital role in supporting the U.S economy, investors are increasingly scrutinizing pipeline operators' long-term economic profitability and sustainability practices. A closer look into the status of pipelines reveals a particular issue that investors need to consider.

In this blog, we look at the delay of the level 2 regulation, some aspects of the Q&A, and the ongoing confusion and divergence around SFDR. We pay special attention to the potential impact of the Principle Adverse Impact indicators, an element of SFDR.