Our research team evaluates 28 items regarding Environment, Social and Governance issues. They input a grade to each one of those items and for each company covered by our them. According to the methodology, the grade is positive when the analysts have a positive view regarding the appraised company to that specific issue, and negative if they have a negative view. The company has then an overall grade and this grade is normalized considering the grades of all the companies covered. With the final normalized grade, our research team is able to increase or decrease the target price for the stock in up to 5%.
Environment issues are appraised considering the following items: (i) Average Environmental impact of the sector, (ii) Environmental impact considering the value chain, (iii) Waste management, (iv) Carbon Pollution, (v) Energetic Matrix, (vi) Environmental Licences Suitability and (vii) Biological Asset Management.
Social Impacts are evaluated based on the following items: (i) Qualified Jobs creation, (ii) Professional development and retetion policies, (iii) Technological spillover, (iv) Economic chain spillover, (v) Activity Social impact and (vi) Anti-slavery policies.
Corporate Governance issues are appraised based on the following items: (i) Board members qualification, (ii) Bord of Directors scope, (iii) Independent Board members, (iv) Board members representatives of minority shareholders, (v) Related Parties Transactions policies, (vi) Executive Compensation, (vii) Executive Management Qualification, (viii) Fiscal Board, (ix) Succession Policies, (x) Risk Management, (xi) Auditing, (xii) Capital Allocation, (xiii) Risk and Compliance Policies, (xiv) Labour, civil and tax liabilities and (xv) Investor Relations policies.
Among the reasons we choose this framework is worth to mention that the methodology: (i) provides a framework that becomes possible to evaluate a company compared to its sector, not only in an isolated way , (ii) creates a framework of analysis that direct and encourage analysts to research the previously mentioned issues, independent of the information provided by the companies, that is frequently biased and (iii) enables us to incorporate the ESG analysis objectively to the portfolio composition.