Schroders SustainEx model identifies world’s most sustainable investment markets
Companies in Switzerland, Singapore and the United States are delivering the most positive social benefits, according to Schroders’ pioneering investment framework SustainEx.
The SustainEx model has identified some of the world’s most sustainable investment markets and sectors by analysing the net benefits or costs companies create per $100 of revenue they produce.
According to Schroders’ analysis*, seven of the top ten most sustainable markets were European, while the least sustainable were resource-dependent emerging markets.
SustainEx is a core component of Schroders’ recently-launched Sustainable Multi-Factor Equity (SMFE) fund, with its analysis helping investors navigate the growing impacts from social and environmental change. The fund recently received a £320 million allocation from Atlas Master Trust in the UK.
Charles Prideaux, Global Head of Product and Solutions, Schroders, commented:
“Our clients are increasingly asking us how we are factoring sustainability into our investment approach. Schroders’ SustainEx model is a ground-breaking tool that ensures these factors are fully integrated into the investment approach of the SMFE fund to help deliver better long-term sustainable returns for our clients.”
Andrew Howard, Schroders’ Head of Sustainable Research, commented:
“Companies and countries are coming under growing pressure from regulators and society to consider their impacts on challenges like climate change, pollution and obesity. As those social tensions become more acute, it’s becoming more likely that these social and environmental externalities will become tangible financial costs.
“It is therefore more important than ever that investors consider the social impacts of companies and portfolios, rather than relying purely on financial measures.
“How companies make money is as important as how much they make today. We developed SustainEx to provide an objective view of the threats and opportunities companies and markets face to help our analysts, fund managers and clients navigate an increasingly complex world.”
The high concentration of listed pharmaceutical and technology firms was a key driver in Switzerland’s ranking. Schroders’ analysis also found that the companies which faced the greatest social and regulatory pressures from governments and regulators also tended to deliver the biggest social benefits.
Among industries, companies in the water, biotechnology and pharmaceuticals sectors provide the biggest social benefits whereas gambling companies created the biggest social costs, relative to their importance in stock markets.
SustainEx is part of the toolkit of Environmental, Social and Corporate Governance analysis and frameworks that Schroders is developing. These include Schroders’ Climate Progress Dashboard and Carbon Value at Risk modelling.
For a more detailed insight into the SustainEx modelling, please click here to read 'The Social State of the Market'.
Please also click here to view a video of Andrew Howard explaining the research in more detail.
* Schroders analysed 9,000 companies and ranked the world’s main stock markets according to their overall impact on society, putting a dollar value to their social and environmental impacts. Schroders has aggregated this analysis according to their stock-market domicile or industry group.
For further information, please contact:
Andy Pearce, PR Manager +44 20 7658 2203/Andy.Pearce@Schroders.com
Estelle Bibby, Head of Media Relations +44 20 7658 3431/Estelle.Bibby@Schroders.com
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