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Service Providers Framework 2020

You are in Investment Consultancy » Investment research

Investment research

IC 10. Investment research activities

10.1. Indicate whether you incorporate ESG into your investment research services.

10.2. Indicate whether the following activities are part of your investment research process. Describe for each activity how you incorporate ESG.

Investment research activities

Describe how you incorporate ESG

          Profundo is part of Chain Reaction Research (CRR),  a consortium that conducts sustainability and financial risk analysis of companies active in tropical commodity value chains. Since 2013, CRR has informed investors of the financially material risks associated with deforestation in the South East Asian palm oil value chain. Since 2016, CRR expanded its work to cover other regions and commodities, including soy and cattle in Brazil and coffee in Peru. CRR conducts its analysis on the basis of its proprietary analytical framework, through which we systematically identify both ongoing deforestation and deforestation risks, analyse the associated operational business risks and quantify these risks for investors. Our publications are widely read in the finance community, with an average of 30,000 views per report, and all CRR partners regularly present at conferences and webinars.

Describe how you incorporate ESG

          We have conducted ESG/sustainability research on many sectors. Some of our sector research are: 
1: Financial sector: In consultation with partners of the FFGI coalition, Profundo develops the methodology to assess the responsible investment and lending policies of financial institutions in worldwide nine countries. Profundo carries out the assessment of banks, insurers and pension funds in the Netherlands, based on the methodology, using qualitative research methods, and gives advice and training to international partners in the EU, Asia and Latin America. Being the preferred advisory and research partner of FFGI, Profundo has a good understanding of the financial sector, international policies, regulation and standards influencing the financial sector, including relevant topics as gender quota for the board and management of financial institutions, pay equity, remuneration and variable pay. 
For Sunrise Project Group, Profundo ranks world's largest insurance groups on their fossil fuel policies w.r.t their underwriting and investing activities. 
Soy: We have conducted many customized researches for commodities such as soy and palm oil covering various sustainability issues such land rights, deforestation, land conversion,human rights, climate change etc.  
Weapon: Profundo is the research partner for the Don't Bank on the Bomb campaign that highlights various risks within the sector and promotes responsible investing behaviour amongst banks, insurance companies and institutional investors.

Describe how you incorporate ESG

          Our research focuses on themes such as deforestation, land grabbing, human rights, labour rights, climate change etc. Some of our past research are mentioned below:
1: Profundo conducted a research into animal welfare issues related to the industrial farming of poultry and pork producing companies. This research highlighted the risks that insurance companies are exposed to while investing in this sector. A similar research is also being conducted for Dutch pension funds' risk exposure into the sector.
2: Human rights: Profundo conducted various studies related to human rights for high risk sectors such as mining, agriculture, and energy sector.
3: We are developing our expertise in water as a theme as we see it becoming one of the most important sustainability risks after climate change.

10.4. Additional information. [OPTIONAL]

IC 11. Demonstrating value on investment research

11.1. Describe how you measure, track or otherwise demonstrate your value on investment research activities.

          We are in the process of developing a system to measure our impact. At present, we derive satisfaction and accomplishment from actions of banks and companies when they change their behaviour. The drivers for this change is a collaborative effort shared by various parties like NGOs, governments, and investors. We take pride in being a part of this call for change by contributing in through profound research. For example, ING withdrew from Dacota Access Pipeline given the pressure from community, NGOs, and other stakeholders. It is also one of the banks under research within the projects of Fair Finance Guide Netherlands. Seeing the bank improving its risk management processes to exclude such controversial projects gives us motivation to continue.

11.2. Additional information. [OPTIONAL]