Understanding Investor Rating Methodology

The founding team of ValueCo, composed of @Mariem Mhadhbi and @Mathieu Joubrel, shared the results of their analyses of the investor rating methodology last September. What you can find in this replay:

The lack of readability of the ESG market

The ESG market often remains obscure for investors and businesses. Each asset manager has its own rating methodology, based on a variety of data sources, ranging from credit rating agencies to corporate information to open access data. The opacity of the ESG market can be attributed to several factors, including the complexity of data, the multiplicity of methodologies, and the lack of clear standards. On the other hand, the development of a proprietary score allows the investor to have a unique investment strategy that is their strength. It is this final, confidential score that Mariem likes to compare to the market crash to draw a parallel with the financial world.

This lack of transparency on ESG ratings can create major challenges in understanding and comparing corporate performance, and it does not promote sustainability. Capturing market sentiment solves this problem by creating consensus that is beneficial to investors and businesses alike.

Understanding Market Sentiment and Rating Methodologies

Mathieu, data scientist and CTO of ValueCo, shares in this webinar his research on evaluating the biases of rating models using Shapley's analysis. Here are the key points to remember:

• Investors can introduce biases by prioritizing certain ESG criteria over others, based on their personal preferences or their financial and extra-financial goals.
• Large listed companies generally get better ESG ratings due to their ability to respond to rating agency questionnaires.
• Transparency, for example with regard to waste recycling, is valued in the same way as the absolute performance of the company.

For asset managers, this webinar highlights:

• The need for a stable and objective reference point to compare their ESG strategy.
• The need to validate ESG data with a reference base and to assess the positioning in relation to peers.
• The benefits of accessing clear and evolving market signals, including identifying companies that are outperforming, discovering investment opportunities that are undervalued by the market, and the ability to adjust the levels of sustainability risks to which their portfolios are exposed.

On the business side, this webinar offers the opportunity to:

• Understand the expectations of investors and the perception of the global market on its sustainability performance.
• Identify best practices in each sector through the benchmark with their peers.
• Manage their CSR strategy effectively with an objective vision of ESG.

A dive into the heart of ESG ratings

This webinar offers a unique opportunity to dive behind the scenes of ESG ratings and improve your understanding of the market. The founding team of ValueCo shares the results of their analyses and highlights the importance of having a stable reference point and regulatory compliance tools for asset managers. Do not miss this opportunity to learn about ESG ratings and to better understand the challenges of the current market. Access the replay of our session and do not hesitate to contact us if you want to know more!