Today we're discussing ESG and we want to run you through our detailed proprietary ESG risk assessments. We have 52 parameters that we're assessing in every company that we research across governance and sustainability.
This is to ensure that we're putting our clients’ assets in companies that are well-governed and have sustainable business models. On the governance side we are assessing four fields: board, management, remuneration and culture.
On the sustainability side we have four fields as well, environmental risks, social risks, understanding and integration of those into company targets and ambitions, and we're assessing common factors across every company of which there are five: climate change, cyber security, human capital, customer trust and taxation.
On the governance side, in board for example, we're assessing board quality, board independence, board diversity, age and tenure, board oversight, board competence, to name but a few.
On the management side we're assessing various areas, management quality is one but management breadth and depth are another two, management competence, management accessibility, which is important to us.
Also, we're assessing management skills in terms of crisis management, this has helped us greatly during this pandemic crisis because we were able to assess companies in terms of ability for them to manage through crisis such as the pandemic crisis.
On remuneration, it's things like remuneration alignment, remuneration transparency, appropriateness and disparity compared to peers.
On the culture side, it's corporate culture, it's sustainability focus, to assess whether companies are properly focused on that area. Diversity integrity and ethics, are two other areas.
Turning to the sustainability side, on the environmental risks, its carbon footprint, pollution risk, resources risk but also environmental risk across the supply chain, which is very important.
On the social risks, we're assessing social impact of companies activities, social improvements that they're making, but we're also assessing social exploitation risks, as one of the areas, but we will come back to that in another video, to give you more details.
On common factors, we've talked about them, climate change, cyber security, human capital, customer trust and taxation. Let's zoom on a few of them, cybersecurity - this is an important area with great reputational risk, potentially as companies are increasingly carrying more of their activities online, so it's important to ensure that companies have got the right approach to cyber security, right focus on cybersecurity, to protect that reputation and therefore reduce the risk of negative impact on shareholder value.
On customer trust, it's an important one, ultimately businesses that do not generate the trust of their customers, do not have a sustainable business model, in our view.
Taxation is another one, this is not about assessing whether companies minimise taxation, it's about ensuring that companies pay the right amount of tax in the businesses and the geographies in which they operate.
Again, an area of focus by regulators, potential reputational risk and potential risk to shareholder value. All of which highlights the importance of having structured detailed consistent framework in place and to ensure that we're putting our clients’ assets on companies that are well-governed and have sustainable business models.
Regulatory information and risk warnings
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