Combining sustainability fundamental factors and ESG sentiments in your asset screening
Investors are subjected to challenges regarding the quality of data of companies’ Environmental, Social and Governance (ESG) practices which is critical for effective investment analysis. The lack of standardization and transparency in ESG reporting and scoring presents a major challenge for investors. Third-party ESG data providers play an important role, but there are limitations with this data especially in terms of the differing methodologies that lead to a variance in scores which asset owners should understand. Furthermore, no single company can pass every test in every category, so investors need to decide what’s most important to them and pick the best portfolio based on their own ESG goals.
Here at HedgeSPA, we offer an ESG solution that is NOT based on a checklist. Such an approach limits performance by definition. Our fundamental premise is that ESG factors, when properly selected, can be a driver to strong long-term portfolio performance:
- Auto alpha selection with ESG fundamental factors.
- ESG sentiment scores based on 140 ESG keywords.
- Cross sectional regression of ESG scores against alpha scores to ensure statistical relevance.
- Tailored portfolio management advice based on your customized parameters, so that you can maintain a clear differentiator from incumbents.
- Combining sentiments with fundamental factors.
- Easy tools that will allow users to reject fundamentally unsound names.
- Drawdown control while proactively managing overall portfolio risk.
- Use ESG (particularly the E) as driver of long-term performance not just to “screen out” the universe, which will mathematically result in poor performing portfolios.
- Automate the operation to find out the fundamental factors that are driving a poor score as well as to review the unfavorable news/social media posts.
- Access the platform anytime and from anywhere under the new normal.