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imug Beratungsgesellschaft für sozial-ökologische Innovationen mbH

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.

          We believe Social Responsibility impacts both tangible assets and intangible capital of a company. Therefore, we believe materiality has to be clearly assessed. Used in a restrictive sense, materiality can lead to ignoring ESG risks and to discard recognizable or significant accounting impact. Used in a dynamic way, materiality broadens the risk framework to factors that may affect stakeholders’ interests.
Within our framework of analysis, we therefore assess to which extend various factors of sustainability (ESG) are material for a company even if they are not analysed in the regular accounting framework, i.e if they can negatively or positively impact the performances, the capacity of creation of value, the accounts of a company.
The information we provide is build to focus on the most material aspect of the extra-financial performance of issuers: before we beginning rating a company, our in-depth approach is reviewed and customised by our sector-specialised teams. We recognise that the challenges faced by companies are not uniform. The sector within which a company operates, impacts the risks they face and the opportunities they may capitalise on. An easy example to illustrate this is the exposure from energy companies to stranded assets when carbon legislation increases. Our methodology is therefore customised per sector to reflect the specific materiality of ESG risks and opportunities for a defined sector.
Vigeo Eiris has 36 sector-specific customised rating models and on average, 20-25 criteria are analysed per sector for each company. For example, for the pharmaceutical and biotechnologies sector, Vigeo Eiris has 24 drivers activated.
The ‘weighting’ assigned to each driver to indicate its materiality goes on a scale from 0 to 3 and is based on:
•    The nature of the impact of the CSR issue on the sector’s stakeholders (e.g. employees, customers, etc.)
•    The exposure of stakeholders to that impact
•    The risks (e.g. legal, operational, etc.) run by companies in the sector that do not adequately manage this impact.

02.4. Additional information. [OPTIONAL]

imug rating's approach to the rating of financial institutions and bank bonds is based on materiality. In an update of the methodology and ciriteria in 2017 various international standards were taken in account, including GRi, SASB and others. The approach is based on the belief, that different exposures of financial institutions have different material ESG issues to cover. For example an international Financial Institution involved in Investment Banking has other material issues than a German-based Mortgage Lending Company.

See also our Position Paper on bank bond rating (also avaivable in English):

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.

          Stakeholder's positions are included in all research and rating products in various levels (e.g. controversies: NGOs, etc,).

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.

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

          Each criterion has qualitative and quantitative elements (Policy, Management Systems, Reporting and Performance)

Explain your approach

          Each criteria has qualitative and quantitative elements (Policy, Management Systems, Reporting and Performance). Also a controversy monitoring process ensures, the performance of a company is taken into account. Controversies have an impact on final score and ESG overall assessment.

Explain your approach

          Indicating in an "Analyst Summary" whether there is a improving or deteriorating and explaining why.

Explain your approach

          For financial institutions (bond sonar): There is a weighting to balance the higher materiality of governance and products issues. Vigeo Eiris research has over 330 indicators in an standard ESG rating, which provides a comprehensive and differentiated view of all relevant ESG aspects, based on a sophisticated and up-to-date methodology

Explain your approach

          Self-reported data has to be proven to have a senior responsibility or to an assurance by a third party.

05.2. Additional information. [OPTIONAL]

RDP 06. Consistency and comparability

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

          imug | rating has established a quality management system with responsibility roles for a Head of Quality and Head of Research. imug | rating is certified to the ISO 9001 standard and has processes for quality controls, including a quality management handbook.

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 are in a permanent contact with clients and stakeholders as well as member of German SRI associations like FNG or CRIC. In dialogue with these stakeholders and parties of SRI world as well as through being up-to date with current publications we are able to identify ESG issues and trends and incorporate them into products. We e.g. have developed a methodology for impact measurement for impact investing and have several projects in this area.

07.3. Additional information

RDP 08. Client use of outputs (Private)

RDP 09.