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Service Providers Framework 2020

You are in Research and Data Provision » Research/process level

Research/process level

RDP 02. Sources for research and/or rating

02.1. Indicate the types of sources you use for research and/or ratings of companies/sectors/geographies or similar. Tick all that apply.

02.2. Indicate how ESG factors are incorporated into your research and/or rating methodology

02.3. Describe how you define materiality and how this is captured in your research and/or rating methodology as well as final product.

          Most of our research is on sustainability themes or commodities. In both these cases, the most material issues are quite evident. For example, we have a long history of research on palm oil value chain and risks involved in the production and trading of palm oil. We have also done many projects on human rights issues focusing on various sectors.

02.4. Additional information. [OPTIONAL]

RDP 03. Stakeholder input

03.1. Describe how you actively include input and information, wherever possible, from relevant stakeholders or interested parties, in the research process or in reaching assessment conclusions.

          For many of our projects, we take interviews, do field research and exchange views through workshops. By including primary methods of research we ensure that our reports are fully informative and that the conclusions/recommendations are not based on desk research only. Of course, it is driven by clients interest and budgets available.

03.2. Additional information. [OPTIONAL]

RDP 04. Up-to-date assessment and ratings

04.1. Indicate how you ensure that your ESG assessment of companies/ sectors/ geographies or similar is up-to-date and that new information is incorporated or new assessments are conducted at reasonable intervals.

          We offer customized research to our clients and we do not have any database. We conduct a review if it is demanded by our clients.

04.2. Additional information. [OPTIONAL]

RDP 05. Balanced research and assessment

05.1. Indicate how you typically ensure a balanced approach to your research methodology and assessing/rating of companies/sectors/geographies or similar. Tick all that apply and explain your approach to each option.

Type of indicators

Explain your approach

          Our research or assessment of any company includes qualitative and quantitative indicators. For example, for evaluating a company’s environmental commitment we look at its policies as well as its KPIs on and trend of its GHG emissions. A reducing trend of GHG emissions indicates that the company does not only have a policy but also measures result and progress of its commitments. This approach is implemented on every theme that the company is being assessed on and gives a holistic view of its ESG progress.

Explain your approach

          To evaluate management indicators we include management commitment, the overall seniority of responsibility of the issue in the organisation, frequency of management discussion and how this process is integrated on a group level given the global operations of any company. We balance the commitment by also evaluating the performance of the company on that specific issue through relevant KPIs. For example, to evaluate the overall human rights commitment of a company, we assess if the management is committed, who is responsible for implementing the human rights policy, and if there is a grievance mechanism. For evaluating human rights performance, we focus on the number of incidents reported on human rights issues and cases resolved. We also include controversy monitoring for evaluating the effectiveness of the procedures and whether there are areas for improvement.

Explain your approach

          For those projects that require assessment of sustainability policies or performance of companies on a regular basis, the year on year progress of the company can then be assessed easily. When the indicators of the assessment are changed in the meantime, figures will need to be corrected to draw correct conclusions. With too many changes between methodologies used we will advise the client to refrain from any historical analysis.

Explain your approach

          We ensure that all the ESG parameters are covered in our analysis while designing assessment methodologies. Depending on the clients’ views and investment beliefs ESG factors could have different weights in different sectors but we always strive to ensure right balance of the three pillars of sustainability: ESG.

Explain your approach

          As we are a bespoke research provider, our clients decide if we must consider self-reported or only public data. We don’t have a standardized approach for it and in our view both the approaches have their own pro’s and con’s. We recognise the challenge/discrepancy between self-reported and public data. The companies or banks under evaluation that agree to provide information and participate actively in the research process get the benefit of scoring high as against the companies or banks that do not participate. In our view, this is also an indicator of a company or a banks preparedness and their commitment towards ESG issues. We believe it is fair to reflect the difference in the scoring. It may act as an incentive to participate and be more transparent for the companies and banks to get better rankings and scores.

05.2. Additional information. [OPTIONAL]

RDP 06. Consistency and comparability

06.1. Describe the control processes in place to ensure quality of research.

          We have review procedures in place that must be used for all our projects. For every project a senior researcher or coordinator is appointed to review output of the project in several stages of the project. When new methodologies are developed, the reviewer must review a draft and when repetitive work is expected, for example multiple assessments according to the designed methodology, a first sample of the intended output must be reviewed as well. Researchers may also decide to integrate peer review into the process and ask the reviewer for advice on complex decisions. At all times, the draft report must be commented upon by the appointed reviewer. Critical reports may also be reviewed by our director.

06.2. Additional information. [OPTIONAL]

RDP 07. Emerging ESG issues and trends

07.1. Indicate whether you identify and prioritise ESG issues and emerging trends.

07.2. Describe how you incorporate the identified ESG issues and trends in your product offerings and business activities.

          We keep ourselves updated with the global debates and developments on ESG issues. This helps us to be the first ones to discuss the potential impact and actions needed with our clients. For example, after the introduction of SDGs, we actively discussed the implications and research ideas with our clients. Similarly, as animal welfare gains momentum, we are actively promoting animal welfare as a topic in our advisory service for including this issue and relevant SRI strategies to our clients.

07.3. Additional information

RDP 08. Client use of outputs

08.1. Describe how research and data provision outputs are used by clients.

Describe how research and data provision outputs are used by clients.

As mentioned earlier, we have a diverse set of clients for our ESG research services. NGOs use our research to enhance their knowledge on a certain topic, design meaningful campaigns, and prepare discussions with relevant stakeholders. Companies, banks, and investors use our research and advise to strengthen their commitment towards sustainability and improve their investment processes.

08.2. Additional information. [OPTIONAL]

RDP 09.