In partnership with our investors, we are committed to leaving a legacy of impact investing, which assists in the process of lifting nations out of poverty.
Global Evolution maintains proprietary ESG ratings for all emerging and frontier market countries. Our sovereign exclusion process is based on the levels and dynamics of our ESG ratings in order to convey our corporate values for ethical and responsible investing.
To inform our investment process, we integrate ESG indicators into our valuation analysis for bonds, nominal exchange rates, and real effective exchange rates. E, S, and G indicators are integrated into econometric valuation models alongside other macro and financial indicators to the extent they generate statistical significance and forecasting power.
In addition, our proprietary ESG-adjusted sovereign credit ratings also serve to inform our investment process by providing a high-frequent outlook and rating for sovereign creditworthiness.
At Global Evolution, we have conducted extensive ground-breaking research into the relationship between sovereign debt investing and Environmental, Social, and Governance (ESG) indicators. We have found clear correlation between the sovereign funding costs and ESG dynamics, with governance, unsurprisingly, the most prevalent.
The quantitative valuation models effectively provide us with statistically significant valuation signals that are partly based on ESG dynamics and partly based on macroeconomic, financial, and fiscal dynamics. The models provide us with such statistically significant valuation signals, i.e. “trade ideas”, at a weekly basis which informs our investment process.
By not integrating ESG dynamics into investment decisions, investors sacrifice essential information. Our quantitative approach reveals a clear ESG historical “dividend” which is conducive for a successful investment process.