Source: Deutsche Bank
Deutsche Bank has announced the launch of a unique concept to integrate Environmental, Social and Governance (ESG) investment factors into its company research.
Sustainable investment strategies / ESG
Media Release | May 4, 2018
as demand for responsible investment solutions accelerates
From today, research on all companies in the EuroStoxx50 index will include a dedicated section with detailed ESG information and guidance.
Combining multiple factors and levering Deutsche Bank’s longstanding expertise in ESG research, each company will be assigned an ESG rating alongside the usual “buy”, “sell”, “hold” and target price information.
The ESG ratings comprise two elements: a measure for risk and one for opportunity talking points. The ratings are not absolute but relative to the other companies in the Eurostoxx50 index, or whichever index being assessed.
In addition to the ESG rating, Deutsche Bank provides an ‘Opportunity Ratio’ (0-100%), which puts the opportunity assessment into perspective to the overall ESG profile. A low ratio indicates that structural risks outweigh the opportunities. A high ratio suggests the opportunity-driven upside dominates.
Deutsche Bank is launching its ESG product to support asset managers at a time of significant growth in demand for responsible investment mandates worldwide. Today, about 25 percent of global assets under management (AUM) are covered by asset managers’ commitment to invest responsibly. Deutsche Bank is convinced this will expand to all managed assets globally within the next 10-15 years.
Jan Rabe, Equity Strategist, Deutsche Bank Equity Research, said: “We believe socially responsible investing will take three more years to reach mainstream status (more than 50 percent of AUM) and 10 more years from then to reach greater than 95+ percent coverage.”
“This is based on the assumption that a) socially responsible investment-ladled AUM grow at a regressive rate to approach global annual GDP trend growth of 3 percent in about 20 years - extrapolating their growth trend since the year 2000 - and b) total assets grow at the rate of global trend GDP as they have since the year 2000.”