Ceres Partners with EAI to Improve Investment Research on Climate Change and other 'Extra-Financial' Issues
BOSTON, MA & LONDON – Ceres, a U.S. coalition of investors, environmental groups and other public interest organizations, today announced it is joining the Enhanced Analytics Initiative as a partner, a new membership category for organizations supportive of EAI's mission, and has pledged to support EAI’s mission to encourage investment research that considers the impact of ‘extra financial’ issues on long-term company performance.
EAI was established in 2004 by a group of asset owners and managers committed to promoting better research on extra-financial issues. EAI has 19 European and U.S. members with collective assets totaling more than $1 trillion (see full list below).
Founded in 1989, Boston-based Ceres works with investors, environmental groups and other public interest organizations to advance environmental stewardship among U.S. and non-U.S. businesses.
Extra-financial issues have the potential to impact companies’ performance or reputation in a material way, yet are generally not part of traditional investment analysis. Extra-financial issues include challenges such as climate change, corporate governance, employment standards, executive compensation and other social and environmental issues.
"Ceres is joining EAI because improving mainstream research on climate change and other extra-financial issues is critical if these challenges are to be fully integrated into investment decisions,"said Ceres President Mindy S. Lubber, who also directs the $3 trillion Investor Network on Climate Risk. "EAI has made great progress in improving this research, but more work needs to be done to broaden its use in the U.S. We hope that Ceres’ partnership with EAI will help us convince more U.S. investors to take a closer look at these unique business challenges in terms of their potential short- and long-term financial impacts."
David Blood, EAI chairman and Managing Partner at Generation Investment Management, praised the addition of Ceres to EAI: "Ceres has for some time been leading the way in the U.S. in helping companies communicate the broader impact of their business activities and is therefore a natural partner for EAI. In addition, Ceres’ success in helping U.S. investors to understand the impact of extra-financials on their own investment returns means that its support for EAI will be of great benefit."
EAI members include ABP Pension Fund, AGF Asset Management, Batirente, BNP Paribas Asset Management, BT Pension Scheme, Calvert, CPP Investment Board, Deutscher Investment Trust/Dresdnerbank Investment Management, Generation Investment Management, Hermes Pensions Management, Investec Asset Management, London Pension Fund Authority, MetallRente, Mistra, PGGM, RCM, SNS REAAL, Sogeposte, Trades Union Congress (TUC) Superannuation Society and the Universities Superannuation Scheme (USS).
Ceres is a national U.S. network of investors, environmental groups and other public interest organizations working with companies to address sustainability challenges such as global climate change. In 1997, Ceres launched the Global Reporting Initiative, which is now the de-facto international standard for reporting the economic, social and environmental impacts of corporate activity. Today more than 850 companies from around the world use GRI reporting guidelines in their public reports.
In 2003, Ceres formed the Investor Network on Climate Risk (INCR), a group of more than 50 leading institutional investors with collective asset totaling more than $3 trillion. The purpose of INCR is to promote better understanding of the risks and opportunities that climate change poses for investors. Improving Wall Street research on climate-related impacts on investment assets – whether from new regulations, direct physical impacts or growing global demand for climate-friendly technologies – is a key INCR priority.
About the Enhanced Analytics Initiative
The Enhanced Analytics Initiative is an international collaboration between asset owners and asset managers aimed at encouraging better investment research, in particular research that takes account of the impact of extra-financial issues on long-term investment. The Initiative currently represents total assets under management of more than €802 billion (>$1,000 billion). EAI incentivises research providers to compile better and more detailed analysis of extra financial issues within mainstream research. Its impact depends on offering credible market incentives to interested and appropriate research agencies to encourage them to adapt their research process and to become more innovative.
About extra-financial issues
Academic analysis indicates that a substantive part of a company's value is related to its extra-financial performance or intangibles. Extra-financial issues are best described as fundamentals that have the potential to impact companies' financial performance or reputation in a material way, yet are generally not part of traditional fundamental analysis. Extra-financial issues typically include, but are not limited to, climate change, corporate governance, employment standards, human resources, executive remuneration, environmental and social areas and reputation risk. They may be specific to a company, an industry or cut across several industry-groups.