Asset4

Company mission

To make the integration of environmental, social and governance (ESG) issues a fundamental part of mainstream investment analysis and corporate decision making by providing flexible and easy-to-use ESG reporting, monitoring and benchmarking capabilities. ASSET4 has become the leading global provider of extra-financial information to both investment professionals and corporate executives by being the most reliable and trusted source for objective, dynamic, auditable and comprehensive ESG information. ASSET4’s state-of-the-art, web-based one-click ESG interface and calculation engine along with the heart of the system — the ASSET4 database — ensure the maximum availability, accuracy and usability of ESG information by our users.

Legal form

Aktiengesellschaft (similar to PLC)

Ownership

High Net Worth Individuals, Goldman Sachs and Merrill Lynch

Foundation:

2003

Executive Board

Gregory David James, Dr. Matthias Oertle, Peter Ohnemus (ASSET4 CEO and President) and Prof. Ulrich Steger.

Number/qualification of employees

220 with the majority having advanced university degrees

Advisory Board/Council

To be established in 2009

Cooperations/Memberships

United Nations Environment Programme Finance Initiative (UNEP FI), The Principles for Responsible Investment (PRI), European Social Investment Forum (Eurosif), UK Social Investment Forum (UKSIF), US Social Investment Forum (USSIF), Ceres Coalition

Background

The ASSET4 framework has been developed by ASSET4 and tested in corporation with leading executives, global asset managers and experts associated with Gesellschaft für Organisation und Entscheidung m.b.H (GOE)/working at Swiss Institute of Technology (ETH), as well as experts from the International Institute for Management Development (IMD) and Copenhagen Business School (CBS).

ASSET4’s system is based on publicly available information collected from company websites, reports, filings and global news sources by a partner based in India. Company monitoring and data quality control is done by ASSET4’s subsidiary in Mauritius. Financial data are supplied by Thomson Reuters. Approximately 10,000 global news sources are scanned daily with LexisNexis.

Research

Investors and corporations need to be able to compare environmental, social, and corporate governance (ESG) performance across a large number of companies using a common framework that is consistent with the Global Reporting Initiative (GRI) indicators and which standardizes reported units, scopes and reporting styles. ASSET4’s database of objective, verifiable criteria on 2,600 of the world’s largest companies makes this possible. Such standardization is essential in allowing mainstream investors to integrate ESG variables into their valuation models and for companies to understand better their own practices in relation to their industry peers.

ASSET4 is committed to enabling a future of sustainability in which companies provide full disclosure on a set of extra-financial variables measuring critical areas of ESG performance.  Companies are increasingly developing measurement systems to track and manage ESG variables given the impact that such factors can have on their bottom lines.  They are also recognizing the need to report such performance metrics externally, given the heightened awareness and interest in ESG information by clients, employees and stakeholders more generally.  ASSET4 believes that it can play an important role in promoting and facilitating the continued development of sustainability reporting by combining a standard set of quantifiable and material ESG performance metrics with best-practice industry examples of transparency and disclosure.  Such a combination is essential to allow companies to define sustainability reporting in a way that is material, relevant for analysts, and consistent across industries.  By providing a common, transparent platform that links reporting companies with the needs of the end users of the data, ASSET4 contributes to a better understanding of the significance of ESG performance metrics by companies and investors alike.  Such understanding and awareness through greater transparency is not only a prerequisite for the integration of ESG factors into financial analysis, but also for companies to have a solid foundation to manage effectively and improve upon their sustainable performance over time.

Criteria

For each company in the ASSET4 universe, the model consists of 900 master data points. A subset of these data points are calculated into approximately 250 key performance indicators that are organized in eighteen categories within four pillars: Economic, Environmental, Social and Corporate Governance.

Categories
Within the 4 pillars, there are a total of 18 default categories, though users may combine categories across pillars to generate their own customised ratings and views of corporate performance. These views can reflect industry or sector-specific opportunities or risk exposure, or general investment themes, etc.

Key performance indicators and data points
The ASSET4 key performance indicators (KPIs) and data points have been developed by the research department and tested in cooperation with specialists in the areas of finance, environment, executive management, corporate governance, sociology, risk management and asset management. In cooperation with these experts and by using advanced multivariate statistical analyses, it was possible to identify the indicators deemed material and most relevant to the business value drivers. From an initial list of nearly 3,000 data points (based on standard reporting frameworks, like IFRS, national codes of Corporate Governances, the Global Reporting Initiative, WBCSD, etc.), only the most objective and material indicators of performance, risks, opportunities and reputation were selected for an initial set of possible indicators. Finally over 250 indicators were selected. ASSET4 will continuously enhance the indicators and data points according to their relevance for companies, industries and the investment community

Responsible investment strategies
Clients are able to use the ASSET4 solution to define a wide range of responsible investment strategies: positive screening, negative screening, engagement and integration.

Here is a short list of ASSET4 capabilities that relate directly to each type of responsible investment strategy:

  • Best-in-class – Identify leaders based on specific criteria
  • Pioneer Screening – Rank and rate companies with cutting-edge leadership
  • Thematic Investments – Select themes, specify criteria – identify suitable companies
  • Ethical exclusions – Specify criteria, generate list of companies passing criteria
  • Simple screening – Specify criteria, generate list of companies passing criteria
  • Engagement – Specify topics (e.g., compliance criteria), monitor and engage with companies according to criteria
  • Integration – Define overlays, integrate data and or assessments with financial metrics

Ranking-/Rating-System

By default the ASSET4 system defines an Equal-Weighted Rating score for each company for each pillar, category and indicator. However, users are able to completely customise evaluation of companies by selecting specific data points and KPIs to generate a customised assessment reflecting their own investment criteria or specific themes like climate change preparedness, human resource capital, eco-efficiency, governance, etc. Through a combination of the MyIndicators and MyRatings capabilities users can track and evaluate whatever issues they or their clients believe are important. MyIndicators allows users to create their own KPIs by defining what data points they want to include and how those data points should be evaluated. MyRatings allow users to either select a unique subset of the default ASSET4 data structure or in combination with MyIndicators create a totally new way of viewing and evaluating the ASSET4 information.

Quality Management:

The keys to ASSET4 quality management include:

  • Data entry checks – multiple regular calculations are built in the data collection tool to guarantee that the data entered is within expected ranges.
  • Quality check automatic rules – these are scripts that check for logical relations between the data points within one company, a set of companies, one fiscal year or multiple fiscal years; ASSET4 has defined hundreds of QC rules and about a 100 are currently implemented.
  • Historical comparison – ASSET4 has collected systematic data going back to 2001 allowing to benchmark the latest collected data with previously available information. ASSET4 is the only company with such an extensive database of historical ESG information, and is using this historical foundation to have the most comprehensive and highest data quality in the industry.
  • Processes focusing on quality – analysts are given the necessary time to collect and validate the data gathered because missing information errors are primarily due to the lack of sufficient time to complete a rating; ASSET4 implements continuous knowledge sharing to bring everybody to a higher level.
  • Data points optimization to maximize usability – ASSET4 listens to the market and modify the framework to meet its continuously evolving needs; unnecessary complexity in the data points is avoided.
  • Monitoring and reporting – ASSET4 monitors the data quality on a constant basis to guarantee it improves and remains the highest in the industry.
  • Continuous education – all ASSET4 analysts receive continuous education to ensure data quality. This practice has shown that the analyst’s experience directly correlates with the quality of data entered by an analyst.

Products & services

ASSET4 is the leading provider of objective, comparable and auditable extra-financial information. The company provide professional investors and corporate executives access to the world’s largest database of environmental, social and governance (ESG) information and the analysis tools to integrate that information into their everyday decision making. The current ASSET4 universe covers over 2,500 corporations including the MSCI World Index, S&P 500, MSCI Europe and FTSE 350.

Professional investors use the assetmasterProfessonal™ solution for a variety of applications such as positive and negative screening, compliance monitoring and integration of ESG into their investment analysis. These applications enable investors to systematically engage with companies, improve investment performance, reduce risk and lower research costs.

Corporate executives, investor relations, CSR managers and corporate communication professionals use the assetmasterExecutive™ solution to have one-click access to ESG benchmarking and best-in-class tracking and evaluation capabilities. These capabilities enable companies to reduce risk, enhance corporate governance and increase accountability, transparency and trust, while at the same time improving communications with long-term investors and other stakeholders.

In addition, ASSET4 recently introduced a solution for investors looking for ways to invest responsibly in sovereign bonds. The Sovereign Supra solution gives users access to transparent and auditable extra-financial information on a wide range of entities including countries, local authorities, private companies, state-owned companies and supranationals.

Clients

The clients of ASSET4 include Goldman Sachs, Merrill Lynch, Lombard Odier Darier Hentsch, CalSTRS, BNP Paribas, Fortis, Fidelity International, Bank Sarasin, Storebrand, AXA, Société Générale, AEGON, Hewitt, AT Kearney and many more with aggregated assets under management exceeding USD 4 trillion.

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