Insight Investment has announced it has introduced its new environmental, social, governance (ESG) risk rating for fixed income investors and was applied to over 90% of companies in the global investment grade indices.
The firm said its new rating was a quantitative risk-analysis tool which provided afresh feed of data into Insight’s credit research hub, alongside non-ESG inputs, by aggregating and assessing external data against a set of 29 ESG risks.
According to Insight, this allowed analysts to base their decisions on direct engagement with companies which was a crucial part of ESG risk analysis.
Joshua Kendall, senior ESG analyst at Insight Investment, said that for many smaller issuers, particularly emerging market or high-yield companies, the availability of relevant non-financial data lagged information from larger issuers.
“We’ve responded by creating a series of ESG risk analysis tools to enhance our delivery of the research-led strategies our clients require,” he said.
“The rating is also effective in deepening our analysis of the nascent but fast-developing market for impact bonds, where issuance recently passed the US$1 trillion ($1.4 trillion) mark. This market is ripe with opportunities, yet large parts remain obscured by low levels of disclosure, creating challenges around comparability and concerns of ‘impact washing’.”
Bruce Murphy, director, Australia and New Zealand, Insight Investment, said: “Recent research has shown Australian’s appetite for impact investing has tripled over the past two years, a trend we see continuing.
“As impact investing becomes mainstream, the key for Australian investors is to ensure they are investing into areas that are genuinely making the positive social or environmental impacts they claim.”