Case Study of Evergreen’s new ESG index


Evergreen Consultants has launched the Evergreen Responsible Investing Grade Index (ERIG Index), which rates fund managers on the seven categories of responsible investing as defined by the Responsible Investment Association of Australia (RIAA).

The approach

Evergreen Consultants employs a survey-based top-down assessment for the index, using questions based on United Nations Principles for Responsible Investing (UNPRI) resources.

“We have adopted the approach that UNPRI takes and we’ve used a responsible investment spectrum that RIAA has built,” Evergreen Consultants founder and chief executive officer Angela Ashton said.

Ashton believes that while a bottom-up approach may be a good way to check a manager’s portfolio, a top-down approach to ethical, social and governance (ESG) can provide a more complete analysis of a manager’s attitude.

She points to the different ESG scores that certain companies get when ranked by different providers. Research by California-based Research Affiliates, for example, shows that the E (of ESG) score for Apple is 0.77 from one provider but just 0.23 from another provider.

“The way we started to think about it was this top down approach…and the reason we did that is it sort of more aligned with what we do anyway,” Ashton says.

Index components

The seven categories the index looks at, and as defined by RIAA, are ESG integration, negative screening, norms-based screening, active ownership, positive screening, thematic/sustainable investing and impact investing.

“We built a questionnaire using UNPRI resources and we sent that out to a whole heap of fund managers….and we could rate them in the seven areas one to 10,” Ashton says.

Based on the survey results and responses from fund managers, Evergreen has scores for approximately 280 fund managers and is still getting responses.

Interestingly, some of the non-ESG funds scored just as well as the ESG Funds.

“Some of the funds that don't call themselves ESG that have a lot of institutional mandates they have done a lot of stuff for superannuation and have done a lot of this [ESG] stuff,” Ashton said.

Read more about Evergreen Consulting and their plans in our Product & Services newsletter out on Tuesday.

Evergreen Consultants Evergreen Responsible Investing Grade Index (ERIG Index) Launched on 26 March 2021 Designed for wholesale and retail investors. Find out more This report is informational only in nature. Industry Moves neither recommends nor endorses this product/service.