5 credible ESG leaders

How do you build a sustainable investment portfolio that doesn’t give in to the suspicion of greenwashing, that is credible? While signatories to the Principles for Responsible Investment (PRI) account for two-thirds of all assets under management worldwide, reflecting an impressive accounting success for sustainable finance, this suspicion is now widespread, both among external observers and within the financial industry itself. Following in the footsteps of academics and non-governmental organizations (NGOs), stock market regulators have recently begun to denounce greenwashing, i.e. the tendency to present a product as greener than it really is.

Since 2001, Geneva-based Covalence has been producing ratings based on environmental, social and governance (ESG) criteria. Its contribution to the fight against greenwashing is reflected in a series of measures developed in 2022. The first is a forward-looking reputation score: narrative ESG data (press articles, communications from NGOs, trade unions and other sources) are first filtered according to the time horizon they cover: information about companies’ promises and commitments, such as net-zero CO2 emissions by 2030 or 2050, are identified and marked as forward-looking data. A forward-looking reputation score is calculated with this information, taking into account the proportion of positive news in relation to all positive and negative news. More…

Source: Covalence / Illuminem