Sustainability & ESG
redpoint believes that economic, environmental, social and governance (EESG) practices of companies can provide valuable investment insight. This view is founded on our investment thesis that EESG as a measure of ‘sustainability’ provides an alternate perspective on the quality of company management. Sustainability refers to ‘good corporate practices’ regarding companies’ interactions with the broader economy, the environment, and society; as well as their approach to corporate governance.
We have constructed the redpoint Rating as our proprietary measure of sustainability. The redpoint Rating combines both financial statement analysis with a range of ESG metrics. Our focus is to identify those ESG data components which could translate across a global group of stocks spanning different sectors thus providing a well formed and consistent dataset. Furthermore, we only include data items which we believe are better indicators of investment outcomes. By way of example, within the governance indicators we follow measures relating to board skill, independence & diversity whilst ignoring components like vision & strategy which we felt were not effectively captured via the raw data feed.
The redpoint Rating was developed & tested for a global peer group of approximately 2500 companies across a broad range of industries and is updated each and every day as new data is systematically collected.
redpoint explicitly integrates ESG issues into our investment process. All our existing accounts (funds / mandates / SMAs) incorporate ESG considerations via:
- screening alone – using our proprietary redpoint Rating and/or a client provided negative screen;
- integration alone (including ESG metrics in a composite alpha signal); or
- in combination – using a composite alpha signal to reweight a screened universe.
Our research framework is compatible with the reporting framework of the Global Reporting Initiative (GRI) and the work of the UN PRI. We are a signatory to the United Nations Principles for Responsible Investment (UN PRI).