ESG
Responsible Alpha is known for our:
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Commitment to Excellence: We are dedicated to guiding institutions toward a sustainable future with immediate and long-term value.
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Innovative Solutions: Our integrated data framework uncovers hidden opportunities and risks, driving informed decision-making.
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Global Perspective, Local Expertise: With a presence in key markets, we bring a global outlook and local insights to every project.
Responsible Alpha excels at integrating non-financial data into decision-making, using replicable non-financial data commonly reported, often referred to as ESG data.
Mainstream
First coined in the 2004 Who Cares Wins report supported by the UN Global Impact, Environmental, Social, and Governance (ESG) criteria are issues that help businesses better integrate material factors into decision-making, analysis, asset management, and securities brokerage. This promotes sustainable growth and long-term success.
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Environmental: Focus on climate change, resource management, and ecological preservation.
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Social: Uphold human rights, labor standards, and community relations.
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Governance: Ensure ethical business practices, transparent reporting, and effective leadership.
ESG are set of standards, metrics, and criteria, some more than 200 years old, enabling institutions to include material non-financial information into decision-making.
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1898: Friends Fiduciary (Morgan Stanley) adopted a “no weapons, alcohol or tobacco” investment policy.
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1960: Sweden’s Ansvar Aktie Fond excludes apartheid exposure with no alcohol and gambling positions.
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1971: PAX World Balanced Fund and First Spectrum Fund launched.
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1972: Dreyfus Third Century Fund launched and Moskowitz publishes list of responsible companies.
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1973: Interfaith Center on Corporate Responsibility (ICCR) files first shareholder resolution.
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1990: Domini Social Index Fund launches 1st cap weighted ESG fund.
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2004: The acronym ESG coined in the report Who Cares Wins supported by the UN Global Compact, ABN AMRO, Goldman Sachs, Morgan Stanley, Westpac, and others.
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2006: PRI began with $4 billion AUM.
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2020: 88% of publicly traded companies, 79% of venture and private equity-backed companies, and 67% of privately-owned companies had ESG initiatives in place. [NAVEX Global].
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2020: More than three out of four (77%) small and mid-caps have a formal purpose statement related to ESG. [Quoted Companies Alliance].
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2020: 80% of the world’s largest companies are reporting exposure to physical or market transition risks associated with climate change [S&P Global Market Intelligence].
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2020: The latest biennial review by the Global Sustainable Investment Alliance (GSIA) in 2020 reported $35.3 trillion in global assets under management employing an ESG lens.
Benefits
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Strategic Clarity: Understand the roadmap for future business operations.
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Revenue Growth: Discover new market opportunities and boost profitability.
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Risk Mitigation: Address climate-related and regulatory risks effectively.
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Cost Reduction: Enhance operational efficiency and reduce expenses.
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Investor Appeal: Align with investor priorities and improve stakeholder relations.
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Regulatory Compliance: Stay ahead of evolving regulations and standards.
Process
Responsible Alpha follows a meticulous process to ensure comprehensive ESG Integration:
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Analysis: Evaluate all relevant financial and ESG data.
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Framing: Align strategies with industry cycles and investment horizons.
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Risk Analysis: Assess and reprice risks and opportunities.
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Forecasting: Provide projections for short, mid, and long-term impacts.
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Impact and Engagement: Integrate ESG impacts into financial metrics and engage stakeholders.
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Best Practices: Collaborate with industry leaders to develop scalable, functional solutions.
Risk Management
Responsible Alpha's risk analysis process incorporates the following risks, starting from short-term to long-term impacts employing double materiality:
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Operational Risk.
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Reputational Risk.
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Liquidity Risk.
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Credit Risk.
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Market Risk.
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Legal / Regulatory Risk.
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Business Risk.
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Strategic Risk.
Double Materiality
Your company may need to identify its material sustainability impacts, risks and opportunities. The required approach for doing that is a “double materiality” assessment, which broadens the concept of materiality from a sole focus on financial materiality to one that includes a view of your impact on stakeholders and society. Impact and financial materiality are not mutually exclusive. Material risks and opportunities are generally derived from the impacts and dependencies on natural, human and social resources. In addition, for most material impacts, a material risk and/or opportunity may emerge over time. This assessment requires viewing materiality from two perspectives.
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Financial materiality: This “outside in” view focuses on how sustainability matters may pose either a prospective material risk or opportunity that could affect a company’s financial performance and position over the short, medium and long term. Sustainability matters are considered material for primary users of a company’s financial reports if omitting or misstating the information could influence the users’ decisions.
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Impact materiality: This “inside out” view focuses on the actual or potential short, medium and long-term impacts on people or the environment that are directly linked to a company’s operations and its value chain. These impacts can be both positive and negative.