Columbia Threadneedle Investments has introduced a ratings tool to measure companies’ adherence to environmental, social and corporate governance (ESG) factors.
The tool, which has a maximum rating of 5 and a minimum of 1, integrates evaluation of a firm’s financial stewardship with its ability to manage ESG risks.
It has been developed in-house by the firm’s 12-member global responsible investment team.
The team comprises experts covering various areas such as RI analytics, ESG research and integration, stewardship and engagement, proxy voting, sustainable outcomes and thematic RI research.
Iain Richards, who leads the team, stated that the launch was triggered by asset owners’ frustration regarding lack of clarity of existing ESG approaches.
The development of the new system is embedded in Columbia Threadneedle’s vision that management of financial and ESG factors are vital for creating long-term value.
In launching the new offering, the firm cited internal research that found companies with the best financial and ESG performance having the capacity to outperform.
Columbia Threadneedle global CIO Colin Moore said: “We believe that analysis combining financial stewardship indicators with an assessment of how well a company is managing the ESG issues pertinent to its business is key to value creation.
“Fundamental analysis is central to active management and we have built an additive, evidence-based and forward-looking RI ratings system. It provides our analysts and portfolio managers with a tool for further insight into a company’s leadership, governance, culture and operational standards of practice, with a focus on issues that are material to its long-term performance.
“We believe that our new RI ratings tool enhances our ability to evaluate investments on behalf of clients.”