Evergreen Consultants has launched the Evergreen Responsible Investment Grading (ERIG) index, which grades funds across the environmental, social and governance (ESG) spectrum.
As part of the process, it joined up with the Responsible Investment Association of Australasia (RIAA) and the ERIG index provided a score out of 10 across the seven areas of the RIAA responsible investment spectrum, which covered ESG integration (avoids harm) to impact investing (contributes to solutions).
To calculate scores, managers were asked to complete a questionnaire of several hundred questions which were developed from UN Principles of Responsible Investment (PRI) and RIAA resources.
Percentage of fund managers who had adopted each capability on the RI spectrum
Source: Evergreen Consultants; RIAA
Funds could be compared to peers and sector averages, and information was collated into a quartile ranking.
Money Management recently used the data to compare the best fixed income funds for the two ends of the spectrum, ESG integration and impact investing.
Michael Ohlsson, Evergreen Consultants director, said users could filter by sectors as well as specific responsible investment inclusions and exclusions.
“Let’s just say the sectors I wanted was Australian small caps and global fixed income, and I don’t want weapons or tobacco or alcohol production, but I do want green buildings,” Ohlsson said.
“The advantage of that is that allows advisers who want to use the website to build portfolios based upon certain likes or dislikes.”
Ohlsson said they would also partner with financial planning software companies to integrate the index into their software which would substantially increase footprint with financial advisers.
“We will also leverage our relationships with specialist paraplanning firms to have them use the ERIG index as the benchmark for selecting RI funds to be included in client portfolios,” Ohlsson said.
“We are also engaging with independent consultants who sit on investment committees to get their support to adopt the ERIG index.”
Angela Ashton, Evergreen Consultants founder and director, said the project started towards the end of last year.
“Responsible investment is something that you couldn’t be without and haven’t been able to be without for at least the past decade,” Ashton said.
“We took the strategic decision 18 months ago to try and be a leader rather than a follower in this area.
“In our view, this isn’t a fad or trend that’s going away, there’s more evidence virtually every day that responsible investment is becoming more important every day.”
Ashton said the expected cost of the service would be $25 a month, which would allow users to store portfolios on there.
“Initially, it’s free for the first month, partly because we’re trying to work out all the payment gateways,” Ashton said.