Research management software provider MackeyRMS is launching ESG Scorecards, a toolkit to improve investment selection, monitoring, and reporting in environmental, social, and governance-focused portfolios. The scorecards are designed to help investment teams grade securities and funds before inclusion in client portfolios, as well as to monitor existing portfolios.
Portfolio managers and analysts can use the scorecards to monitor the ESG status of portfolio holdings in real time, and report details of their selection and monitoring process to internal and external stakeholders. “Users will have a single scorecard, and that scorecard will allow you to configure and rate your metadata based on each of the three columns of E, S, and G as you see fit,” says Will Keuper, vice president and head of product at MackeyRMS.
Over the past few years, ESG funds have come to represent an unmissable marketing opportunity for many investment firms. Data from research firm Morningstar shows that firms are rebranding existing funds to reflect sustainability objectives. In the second quarter of this year, 40 European funds were repurposed in this way, according to Morningstar, including BNP Paribas Easy ECPI Global ESG Infrastructure, previously known as BNP Paribas Easy NMX 30 Infrastructure Global, and Metropolitan Rentastro Growth, which is now Metropolitan Rentastro Sustainable Growth.
At the same time, investment flows into ESG funds are increasing. The Morningstar research shows assets in European sustainable funds rose to an all-time high of $870 billion in Q2 2020, a 20% increase from Q1. Globally, a record $71.1 billion of cash flowed into sustainable funds in Q2. These funds now hold more than $1 trillion in assets under management.
Faced with this trend, asset managers are trying to understand how to truly integrate ESG considerations into their investment strategies. Firms say that while third-party ESG ratings provide a good basis for research, analysts must delve much deeper for true insights into the companies and sectors they cover. This has led many asset managers to build their own proprietary datasets and look to alternative data, quant strategies and new metrics for impact investing.
Keuper says individual funds will have developed their own unique processes for ingesting and aggregating ESG data, so MackeyRMS designed the ESG Scorecards so that each fund can integrate its own ratings into the platform. Users can then view real-time ESG status updates for all portfolio holdings within whatever research dashboard the investment firm uses.
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