Ryedale, a leading portfolio management technology provider, and Minerva, an environmental, social and governance (ESG) data provider, have announced a collaboration designed to harness the growth in demand of sustainability-related data in the fund management investment process amongst asset owners, investment managers and regulators.
In the face of extreme weather, resource scarcity, changing societal attitudes and regulatory pressures, investors are demonstrating their willingness to take on board ESG-driven risks and sustainable business practices.
Meanwhile, governments and corporates globally are committing to the transition to net-zero greenhouse gas emissions by 2050, consistent with the Intergovernmental Panel on Climate Change (IPCC) 1.5C target. Estimates from the IFC suggest that up to $93tn of investment is needed to enable this capital re-allocation and transition to a low carbon, climate-resilient economy.
The Global Sustainable Investment Alliance reported that sustainable investment assets in Europe, the US, Japan, Canada, and Australia and New Zealand were USD 30.7tn at the beginning of 2018, a 34 per cent increase since 2016. This trend continues along with increased legislative frameworks and regulation with regards to responsible investment principles across multiple geographies.
The risks associated with these trends are likely to have a significant impact on asset pricing and the overall investment opportunity set. It is also acknowledged by institutional investors that capital markets may not be fully pricing issues like climate change and that ESG risks will materially impact the bottom line.
As a response, asset owners and investment managers are looking for ways to integrate ESG issues at all points of the investment process, including stewardship and active ownership. What’s more, beyond managing risks, it is also about delivering impact alongside the financial returns of the portfolio.
Jon Rushman, founder and CEO at Ryedale said: "Global demand for delivering differentiated ESG data, analytics and tools is growing and driven by the regulations and investor acceptance of the significance and materiality of sustainability factors."
"Having the ability to drill down into the portfolio and better understand ESG profiles, thereby identifying companies that are better positioned for future challenges, is increasingly seen as a necessary aspect of a portfolio management system, in order for investors to be able to manage and monitor the risk and opportunities associated with these megatrends. Ryedale is helping to shape such solutions by integrating sustainability capabilities across the investment asset classes".
Minerva's CEO, Sarah Wilson, has spent over 20 years in the business of proxy research, during which time she has empowered clients with bespoke data to inform their voting decisions. She said: "Minerva is delighted to be partnering with Ryedale to support investors' sustainable investment ambitions. Where stewardship, proxy voting and sustainability were once considered 'post-trade' activities, we believe that Ryedale’s innovative approach to holistic portfolio construction is the way forward."