Proprietary ESG Investment Tools
Going beyond third party rating tool capabilities to deliver value through unique analysis, measurement and reportingSchrodersIQ
We do not take a “one size fits all” approach to ESG integration. We understand that different asset classes require different methods to integrate ESG into their investment processes effectively. We developed SchrodersIQ, our suite of research based and quantitative ESG investment tools, to provide insights to empower our investors to make decisions. These tools act as an ESG lens for company, sector, country level risks and opportunities. A brief overview of our tools is presented below:
Investment Analysis
SustainExTM
Translates companies’ net positive or negative impacts on society into financial costs.
- ~16,000 global companies and 150 governments covered
- 1,000 academic and industry studies
CONTEXTTM
A customizable stakeholder analysis framework to assess the sustainability of a company’s business model via material indicators. Our flagship research tool covers
- 700+ ESG trends across 47 sub-sectors
- 14,000+ equity and fixed income issuers
Climate change
Carbon Value at Risk (VaR) captures the effect of higher carbon prices on a company’s cash flows and valuations
Net Zero Dashboard helps track company commitments and measure portfolios’ temperature alignment dynamically. It includes financed emissions (carbon footprint) and temperature alignment (implied temperature pathway of our holdings based on their emissions reduction targets)
Physical Risk provides risk scores based on exposure to a range of climate-related hazards. It assesses the cost to insure a company’s assets against physical impact or damage
Thematic alignment
ThemExTM
Analyzes the thematic alignment of individual companies and portfolios to the UN SDGs
- 16,000+ companies covered
- Across 6,000 products and services
Impact measurement
Schroders Impact scorecard
A standardized scorecard established with BlueOrchard to assess and monitor the impact of investments across 5 dimensions:
- WHAT: 30+ impact intentions aligned to SDGs and EU taxonomy
- HOW MUCH: 60+ KPIs aligned to SDG targets and industry standards
- WHO: Target stakeholder, profile of customer or industry that is served and direction of change
- CONTRIBUTION: Schroders’ degree of influence, depth of relationship and engagement strategy
- IMPACT RISKS: Nine impact risks considered and act as a scaler on total impact score
Note: Our proprietary ESG tools are designed to enhance the research and evaluation process but do not guarantee favorable investment results or the identification of all risk. Schroders uses SustainEx™ to estimate the net social and environmental “cost” or “benefit” of an investment portfolio having regard to certain sustainability measures in comparison to a product’s benchmark where relevant. It does this using third party data as well as Schroders own estimates and assumptions and the outcome may differ from other sustainability tools and measures. CONTEXTTM is a proprietary tool used by Schroders to support the analysis of companies’ and issuers’ management of the environmental, social and governance trends, challenges and opportunities that Schroders believes to be most relevant to that company’s or issuer’s industry. It provides access to a wide range of data sources chosen by Schroders. Any views or conclusions integrated into Schroders’ investment-decision making or research by fund managers or analysts through the use of CONTEXT™ will reflect their judgement of the sustainability of one or more aspects of the relevant company’s or issuer’s business model rather than a systematic and data-driven score of the company or issuer in question. ThemExTM analyses the thematic alignment of individual companies and portfolios to the UN SDGs. The alignment score is derived from proprietary qualitative analysis across themes, sectors, regions, and stocks. The mapping of business activities to SDG’s utilizes third party categorization of companies’ divisional revenues. ThemExTM alignment score for a given company is limited by the granularity of the underlying data and that company’s market capitalization, sector, or region. Like any model, ThemExTM will evolve and develop over time as Schroders receives feedback on the model and continues to seek ways to systematically enrich the insights captured through the tool.
Schroders’ proprietary sustainability tools including SustainEx™ may not cover all of a fund/portfolio’s holdings from time to time, in which case Schroders may use a range of alternative methods to assess the relevant holding. In addition, certain types of assets (such as cash and certain equivalent securities) are treated as neutral and are therefore not considered by our proprietary tools. Other types of assets such as equity indices and index derivatives may not be considered by our proprietary tools and in such case would be excluded from a product’s sustainability score.
Integrated Approach
We integrate ESG factors into our investment decision making because we believe this is fundamental to our goal of delivering long-term returns for our clients. Our proprietary tools, research and analysis are integrated into the investment process.
Our 60+ investment desks are required to undertake an annual integration accreditation facilitated by our Sustainable Investment team. Our sustainability focused equity and credit analysts on investment desks work with our ESG specialists to integrate ESG factors into each investment case.