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Two analytics firms create ESG ‘factor’ exposure tool

ESG portfolioTwo investment analytics providers have partnered to offer a way for investors to measure the impact of environmental and social investing in their portfolios.

Style Analytics, which offers tools for identifying how investment factors affect portfolio returns, and Sustainalytics, an environmental, social and governance (ESG) research house, are collaborating on an “ESG factor simulation tool” so that investors can optimise the impact of ESG within their portfolios.

Sustainalytics’ ESG data is applied to Style Analytics’ fundamental equity factor analysis to reveal ESG factor exposure.

Investors can compare a portfolio with a custom peer group and with specific funds.

Sebastien Roussotte, CEO of Style Analytics, said, “ESG has become a very important part of investing and we felt the need to enhance our ESG coverage and capabilities. Our collaboration with Sustainalytics has allowed us to create the most insightful ESG portfolio analysis tool on the market.”

In a webinar with Funds Europe earlier this year, Bernie Nelson, president for the North America region at Style Analytics, was asked whether ESG could be viewed as a factor and, therefore, potentially a driver of alpha. 

The firm was looking at the performance attribution of those factors, Nelson said, and noted that ESG was a nascent field but an important one, given that products claiming ESG qualities were growing in number.

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