You can read the full results of the survey here.

One of the key readings taken from this survey was that over half of asset owner participants believe that the primary obstacle to increased sustainable investment adoption is concerns about availability of ESG data and the use of estimated data.

We have written about the issue with guesstimated data before.

Some large ESG ratings firms have padded their systems with estimates and averages in order to provide larger (and more expensive) coverage and more 'comprehensive' data solutions.

However, there are many issues with this approach - three key problems being:

𝟭. 𝙎𝙝𝙤𝙧𝙩-𝙩𝙚𝙧𝙢𝙞𝙨𝙢 𝙞𝙨 𝙖 𝙗𝙧𝙚𝙖𝙘𝙝 𝙤𝙛 𝙛𝙞𝙙𝙪𝙘𝙞𝙖𝙧𝙮 𝙙𝙪𝙩𝙮.

Many investors blindly trust these large legacy brands and their ESG ratings; in fact some asset owners demand that their asset managers use one of them.

However, it should be noted that relying on the estimated ESG data provided by these firms could constitute a breach of fiduciary duty.

That is to say, relying on data you can not validate or interrogate in order to satisfy a short-term reporting or regulatory requirement is not acting in the best interest of the investors that these funds truly serve.

𝟮. 𝙏𝙝𝙚 𝙬𝙤𝙧𝙙 '𝙚𝙨𝙩𝙞𝙢𝙖𝙩𝙚𝙙' 𝙨𝙪𝙜𝙜𝙚𝙨𝙩𝙨 𝙖𝙣 𝙖𝙣𝙖𝙡𝙮𝙨𝙩 𝙢𝙞𝙜𝙝𝙩 𝙝𝙖𝙫𝙚 𝙨𝙩𝙪𝙙𝙞𝙚𝙙 𝙩𝙝𝙖𝙩 𝙘𝙤𝙢𝙥𝙖𝙣𝙮 𝙖𝙣𝙙 𝙞𝙩𝙨 𝙞𝙣𝙙𝙪𝙨𝙩𝙧𝙮 𝙖𝙣𝙙 𝙢𝙖𝙙𝙚 𝙖𝙣 𝙞𝙣𝙛𝙤𝙧𝙢𝙚𝙙 𝙘𝙤𝙢𝙥𝙖𝙣𝙮-𝙨𝙥𝙚𝙘𝙞𝙛𝙞𝙘 𝙚𝙨𝙩𝙞𝙢𝙖𝙩𝙚.

In reality, although their precise methodology is typically opaque, the estimated value is just an average, calculated from that company's regional and sectoral peer group. That's why we call it a 'guesstimate'.

The example we give to investors is that it is like hiring an analyst after you were reassured that they got 70% in their final mathematics exam. You then learn that actually, they never showed up for that exam and this score was in fact a class average. Which leads onto the next key point:

𝟯. 𝙄𝙩 𝙞𝙨 𝙣𝙤𝙩 𝙘𝙡𝙚𝙖𝙧 𝙬𝙝𝙖𝙩 𝙘𝙤𝙢𝙥𝙖𝙣𝙮 𝙙𝙖𝙩𝙚 𝙞𝙨 𝙛𝙖𝙘𝙩𝙪𝙖𝙡 𝙖𝙣𝙙 𝙬𝙝𝙖𝙩 𝙞𝙨 𝙚𝙨𝙩𝙞𝙢𝙖𝙩𝙚𝙙.

Depending on the third party data provider you may be subscribed to, you can sometimes click through some of the data they have collected - for example, a company's CO2 emissions number.

But you won't know whether it is an actual value disclosed by the company, or a value estimated by the many analysts working for that ratings firm.

No estimated data - no black boxes.

Here at Integrum ESG, we have always committed to never using estimated data and only providing a 'glass box' to our investor clients.

Our affordable, customisable and transparent ESG solution was built by investors with over 20 years of experience in equity research - therefore we understand the real dangers of using opaque data which is only updated once every so often.

Last month, my colleague Hazel Cranmer wrote a post on the issues of companies relying solely on carbon ‘offsetting’ to reach decarbonisation goals.  

She argued carbon offsets fail to make genuine carbon reductions, and that we should instead invest in ‘carbon insetting’; avoiding emissions at the source “rather than being forced to clean them up”.  

As the carbon market heads into turmoil following the recent announcement from Zimbabwe (https://www.bloomberg.com/news/articles/2023-05-18/global-carbon-market-in-turmoil-after-zimbabwe-grabs-offset-money?leadSource=uverify%20wall), offset schemes have become more unreliable in achieving carbon neutral status. 

It has become apparent that this sentiment is widely shared, with both the EU parliament and UK’s advertising watchdog proposing bans last week on adverts making ‘carbon neutral’ product claims using offsets. (https://www.theguardian.com/environment/2023/may/15/uk-advertising-watchdog-to-crack-down-on-carbon-offsetting-claims-aoe &  https://us10.campaign-archive.com/?e=6cd1763d23&u=f89d68518db6e2585b0808206&id=35b50e16fc) .  

The crackdown comes as no surprise, given the seemingly endless cases of companies being exposed for greenwashing. 

Examples include the TotalEnergies lawsuit, who claimed their Thermoplus heating oil was carbon neutral through compensating for emissions via offsetting schemes in India and Peru, and the banning of Lufthansa’s recent campaign declaring their green efforts (carbon offsets) were ‘protecting the world’s future’. 

𝗛𝗼𝘄 𝗺𝗶𝗴𝗵𝘁 𝘁𝗵𝗲𝘀𝗲 𝗽𝗿𝗼𝗽𝗼𝘀𝗮𝗹𝘀 𝗮𝗳𝗳𝗲𝗰𝘁 𝘁𝗵𝗲 𝘀𝘂𝘀𝘁𝗮𝗶𝗻𝗮𝗯𝗶𝗹𝗶𝘁𝘆 𝗹𝗮𝗻𝗱𝘀𝗰𝗮𝗽𝗲?

I believe we will see two changes: 

1. More accurate sustainable purchasing decisions 

Despite growing success in exposing dubious green claims, it is likely that many other companies make similar statements but evade consequences. The recent proposals should hopefully discourage such behaviour, prompting companies to either verify their claims or refrain from making them altogether. We should then, in theory, be able to trust what companies are advertising to us and make more accurate decisions on what we buy based on sustainability grounds. 

2. A shift towards carbon ‘insetting’ 

Apprehension of lawsuits could push companies towards more credible initiatives to substantiate their green claims. In essence, the crackdown should serve as a catalyst for companies to shift their reliance on feeble offsetting schemes and embrace more robust approaches in reducing the carbon footprint of their offerings. 

𝗜𝘀 𝘁𝗵𝗲𝗿𝗲 𝗮𝗻𝘆 𝘂𝘀𝗲 𝗳𝗼𝗿 𝗰𝗮𝗿𝗯𝗼𝗻 𝗼𝗳𝗳𝘀𝗲𝘁 𝘀𝗰𝗵𝗲𝗺𝗲𝘀 𝗶𝗻 𝘀𝘂𝘀𝘁𝗮𝗶𝗻𝗮𝗯𝗶𝗹𝗶𝘁𝘆 𝘀𝘁𝗿𝗮𝘁𝗲𝗴𝗶𝗲𝘀?

We at Integrum ESG do not include carbon offsets in calculating the carbon footprint of companies (as per GHG Protocol guidelines).  

However, investments in offsetting schemes should not be discouraged entirely. Not only do they contribute to the pool of climate finance needed to reach international climate goals, but they also demonstrate a company’s dedication to global climate mitigation beyond their value chain; a policy valued by ESG ratings providers and investors. 

But what do you think?

When CEOs of large public companies are receiving large wages and bonuses, should these bonuses be rewarded when there is a reduction in company value? Why should shareholders reward poor performance, and therefore reinforce misalignment?

A recent example of this is seen when Uber's CEO Dara Khosrowshahi, was rewarded with a 146.9% increase on his $2 million bonus (on top of his $24 million compensation package) in 2022 due to a vague ‘better-than-baseline company performance’ even though the company stock had fallen by 40% (https://www.cmswire.com/leadership/what-the-heck-is-happening-at-uber/).

Alignment and executive pay  

One of the most important governance metrics (with the highest number of sub-metrics captured under this metric by Integrum ESG) is Remuneration Alignment, which evaluates executive pay alignment with company shareholders’ interests. 

A long-standing issue exists (particularly in large public companies with many shareholders), where separation of ownership (shareholders) and control (managers/executives) leads to a loss of alignment with the owners’ interests, often now called ‘the agency problem’.

Executive pay in large public companies can be a controversial topic due to leviathan compensation packages, which are used to combat the agency problem, keeping interests aligned with performance-related remuneration goals and long-term incentives that are of importance to the company, usually containing key performance indicators (KPIs).

Many KPIs are increasingly focused on ESG targets such as aiming for net zero by 2050, in line with the Paris Agreement. 

Will things change?

Ultimately, the responsibility of executive pay and alignment is down to the Remuneration Committee on the board.

The U.S. Securities and Exchange Commission adopted a Pay Versus Performance disclosure rule in August last year. This makes it mandatory for US companies to disclose the relationship between executive compensation actually paid compared to the financial performance of the company. 

It is clear that remuneration alignment is building in importance for regulators and shareholders alike, particularly when considering the desired transparency they expect from corporates and fund managers.

Our Real-time ESG Tracker picked up a significant negative red spike for MillerKnoll (MLKN), starting by flagging one of the first tweets made about the controversy.

Our systems immediately sent out an alert to our clients with MillerKnoll in their portfolio.

𝗪𝗵𝗮𝘁 𝗱𝗶𝗱 𝘄𝗲 𝗹𝗲𝗮𝗿𝗻?

MillerKnoll CEO, Andi Owen, came under fire after a video was released of her scolding her employees for complaining about not receiving bonuses - advising them to "leave pity city" and focus on making money for the company.

This was even though she herself had made almost $1.2 million in bonuses in the previous year, as part of a pay package worth nearly $5 million.

These comments had ramifications on public sentiment and their share price.

𝗪𝗵𝗮𝘁 𝗼𝘂𝗿 𝗥𝗲𝗮𝗹-𝗧𝗶𝗺𝗲 𝗘𝗦𝗚 𝗧𝗿𝗮𝗰𝗸𝗲𝗿 𝘀𝗮𝘄 🚩

The video was first leaked on Twitter on Friday 14th April just past midnight (GMT).

Our Real-Time ESG Tracker then immediately caught this tweet and all further tweets and articles relating to it.

The number of stories peaked on the 19th April, being reported on via many mainstream media sources and forcing the CEO to come out and apologise.

Since that initial story, the share price of MillerKnoll has continued to fall and has brought the issue of executive pay and bonuses back into the limelight.

The EU regulators (ESA) have just proposed a set of revisions to the SFDR (Sustainable Finance Disclosure Requirement).

The consultation closes July and 2 law firms we have spoken to estimate any changes would come into legal effect in Jan 2024.

𝗛𝗲𝗿𝗲'𝘀 𝗮 𝘀𝘂𝗺𝗺𝗮𝗿𝘆 𝗼𝗳 𝘁𝗵𝗲 𝟱 𝗸𝗲𝘆 𝗽𝗼𝗶𝗻𝘁𝘀 𝗳𝗿𝗼𝗺 𝘁𝗵𝗲 𝟭𝟱𝟴-𝗽𝗮𝗴𝗲 𝗰𝗼𝗻𝘀𝘂𝗹𝘁𝗮𝘁𝗶𝗼𝗻 𝗽𝗮𝗽𝗲𝗿:

1️⃣ The number of mandatory PAIs (indicators that funds making sustainable investments will have to report to) will be increased from 14 to 18.  

The new 4 are 'Social' indicators, relating to the companies the fund invests in:

🚩 Revenue earned in countries which don't co-operate with the EU on tax

🚩 Involvement in production of tobacco

🚩 Whether the company tries to block trade unions

🚩 % of staff earning less than an adequate wage

2️⃣ If the fund has an emissions reduction objective, it must publish quantified details.

3️⃣ More disclosure will be required on a fund's EU Taxonomy alignment (bringing SFDR and the Taxonomy closer together).

4️⃣ The requirement for a company to 'do no significant harm' to certain EU environmental and social objectives - if it is to classify as a 'sustainable investment' - will be more precisely defined (with quantified 'thresholds' to limit fund managers' discretion).  

5️⃣ The regulatory disclosures that fund managers have to publish (Annexes II-V) will have a summary dashboard at the front, designed for non-professionals to understand.

𝗙𝗼𝗿 𝗮𝗻 𝗔𝗿𝘁𝗶𝗰𝗹𝗲 𝟴 𝗳𝘂𝗻𝗱, 𝗶𝘁 𝘄𝗶𝗹𝗹 𝗰𝗼𝗻𝘁𝗮𝗶𝗻 𝟱 𝗸𝗲𝘆 𝗯𝗼𝘅𝗲𝘀:

🚩 What 'environmental and social characteristics' are promoted by the fund (max 250 characters)

🚩 What % of the fund's investments are sustainable

🚩 What % of the fund's investments are Taxonomy-aligned

🚩 Does the fund consider the PAIs

🚩 If the fund supports an emissions reduction target, what is the total % reduction targeted, and by what year

𝗪𝗵𝗮𝘁 𝗰𝗼𝗻𝗰𝗹𝘂𝘀𝗶𝗼𝗻𝘀 𝘀𝗵𝗼𝘂𝗹𝗱 𝘄𝗲 𝗱𝗿𝗮𝘄 𝗳𝗿𝗼𝗺 𝘁𝗵𝗲𝘀𝗲 𝗻𝗲𝘄 𝗽𝗿𝗼𝗽𝗼𝘀𝗮𝗹𝘀?

💭 The SFDR compliance headache is not going away: 

The EU seems determined to keep 'raising the bar' for any fund marketing itself as 'sustainable'.

💭 Investors' need for agile software that can keep up with increasing disclosure requirements is going to increase.

💭 Our argument about 𝐀𝐫𝐭𝐢𝐜𝐥𝐞 𝟴+ (linked here) gets stronger:

If a fund wants to be labelled Article 8 without reporting to the PAI, it will have to publish a front page 'dashboard' every quarter, that says "This product did not make sustainable investments" and then "This product did not consider the most significant negative impacts of its investments on the environment and society" (the regulator wants this wording to replace 'PAIs', to make it clearer).

Which will surely make any investor think "𝘵𝘩𝘪𝘴 𝘧𝘶𝘯𝘥 𝘮𝘪𝘨𝘩𝘵 𝘩𝘢𝘷𝘦 𝘢𝘯 𝘈𝘳𝘵𝘪𝘤𝘭𝘦 8 𝘭𝘢𝘣𝘦𝘭, 𝘣𝘶𝘵 𝘪𝘵 𝘪𝘴 𝘯𝘰𝘵 𝘪𝘯 𝘢𝘯𝘺 𝘮𝘦𝘢𝘯𝘪𝘯𝘨𝘧𝘶𝘭 𝘸𝘢𝘺 𝘢 𝘴𝘶𝘴𝘵𝘢𝘪𝘯𝘢𝘣𝘭𝘦 𝘧𝘶𝘯𝘥".

𝗪𝗵𝗮𝘁 𝗱𝗶𝗱 𝘄𝗲 𝘀𝗲𝗲?

Our proprietary Real-Time ESG tracker picked up a significant negative red spike for Pinduoduo(PDD), which has continued to rise throughout the day.  

Our systems immediately sent out an alert to our clients with Pinduoduo in their portfolio.

𝗪𝗵𝗮𝘁 𝗱𝗶𝗱 𝘄𝗲 𝗹𝗲𝗮𝗿𝗻?

Google has suspended Pinduoduo, one of China’s most popular e-commerce platforms, from its Play Store.

It has been suggested that versions of the app were found to include malware, exploiting zero-day exploits to hack users.

While this accusation has been rejected by a spokesperson of the Chinese company, the app has been suspended from the Play Store while an investigation continues and users of the app have been warned and prompted to uninstall.

Signed into law in August 2022, the Inflation Reduction Act (IRA) has been hailed as “the most significant climate legislation in U.S. history” according to the US Environmental Protection Agency (https://www.epa.gov/green-power-markets/inflation-reduction-act).

The main intention of the IRA is to catalyse investment in clean energy: the act itself includes $370b of energy-related spending; two of the main beneficiaries of this will be clean energy and electric vehicle (EV) companies.  

The funds are to be delivered through tax incentives, grants, and loan guarantees. According to McKinsey, US solar, wind, heat pumps and EV industry all stand to gain from production and investment tax credits of $30 billion for manufacturing (https://www.mckinsey.com/industries/public-and-social-sector/our-insights/the-inflation-reduction-act-heres-whats-in-it). 

We looked into 4 companies that are starting to benefit from the IRA:

𝗧𝗲𝘀𝗹𝗮 - On 22nd February, Tesla announced a shift in cell production from Germany to the US after considering incentives available through the IRA, making it one of the first firms to declare a strategy shift prompted by the law. [1]

𝗠𝗲𝗿𝗰𝗲𝗱𝗲𝘀-𝗕𝗲𝗻𝘇 𝗚𝗿𝗼𝘂𝗽 - Mercedes are now in the process of building 10,000 fast-charging points in North America from 2023, targeting 2,500 charging points at 400 locations across most U.S. states and Canada by 2027. [2]

𝗟𝗶𝗻𝗱𝗲 - According to a recent Reuters report, Linde has estimated the total investment opportunity for the company in the United States alone could exceed $30 billion over the next decade. [3]

𝗙𝗶𝗿𝘀𝘁 𝗦𝗼𝗹𝗮𝗿 - The company has recently announced a big expansion, planning to invest up to $1.2 billion in scaling production of American-made photovoltaic (PV) solar modules. The investment is forecast to expand the company’s ability to produce American-made solar modules for the US solar market to over 10 gigawatts (GW) by 2025. [4]

𝗧𝗵𝗲 𝗿𝗲𝗮𝗰𝘁𝗶𝗼𝗻 𝗳𝗿𝗼𝗺 𝘁𝗵𝗲 𝗘𝗨 𝗮𝗰𝗿𝗼𝘀𝘀 𝘁𝗵𝗲 𝗽𝗼𝗻𝗱 𝗵𝗮𝘀 𝗯𝗲𝗲𝗻 𝗹𝗲𝘀𝘀 𝗲𝗻𝘁𝗵𝘂𝘀𝗶𝗮𝘀𝘁𝗶𝗰.

European officials have complained that the IRA; which – amongst other things - limits tax credits to EVs assembled in the United States, and violates U.S. commitments not to subsidise domestic industries or discriminate against foreign ones.  

There are genuine fears that it could lure businesses away from the bloc with generous tax breaks - and there is no smoke without fire.  

The CEO of Enel in December publicly claimed the IRA is more efficient than EU aid to support domestic production of energy sector components.  

The response by the European Commission has been to unveil its Green Deal Industrial plan, signifying a potential relaxation of state aid towards clean tech, although this is struggling to get ubiquitous support among all member states.  The EU has warned against a subsidy race but has welcomed the commission’s response to the IRA.

This is a post made by our CEO Shai Hill on LinkedIn on 10th March 2023.

The large legacy ESG ratings brands use a vast amount of estimated data.

That's how they are able to cover >10,000 companies, including emerging market companies that don't actually publish any ESG data.

There are 3 problems here:

1. 𝗧𝗵𝗲𝘆 𝗱𝗼𝗻'𝘁 𝗺𝗮𝗸𝗲 𝗰𝗹𝗲𝗮𝗿 𝘄𝗵𝗮𝘁 𝗰𝗼𝗺𝗽𝗮𝗻𝘆 𝗱𝗮𝘁𝗮 𝗶𝘀 𝗮𝗰𝘁𝘂𝗮𝗹 𝗮𝗻𝗱 𝘄𝗵𝗮𝘁 𝗶𝘀 𝗲𝘀𝘁𝗶𝗺𝗮𝘁𝗲𝗱.

Depending on your subscription, you can sometimes click through to a CO2 emissions number, but you won't know whether it is an actual value disclosed by the company, or a value estimated by that ratings firm.

2. 𝗧𝗵𝗲 𝘄𝗼𝗿𝗱 '𝗲𝘀𝘁𝗶𝗺𝗮𝘁𝗲𝗱' 𝘀𝘂𝗴𝗴𝗲𝘀𝘁𝘀 𝗮𝗻 𝗮𝗻𝗮𝗹𝘆𝘀𝘁 𝗺𝗶𝗴𝗵𝘁 𝗵𝗮𝘃𝗲 𝘀𝘁𝘂𝗱𝗶𝗲𝗱 𝘁𝗵𝗮𝘁 𝗰𝗼𝗺𝗽𝗮𝗻𝘆 𝗮𝗻𝗱 𝗶𝘁𝘀 𝗶𝗻𝗱𝘂𝘀𝘁𝗿𝘆 𝗮𝗻𝗱 𝗺𝗮𝗱𝗲 𝗮𝗻 𝗶𝗻𝗳𝗼𝗿𝗺𝗲𝗱 𝗰𝗼𝗺𝗽𝗮𝗻𝘆-𝘀𝗽𝗲𝗰𝗶𝗳𝗶𝗰 𝗲𝘀𝘁𝗶𝗺𝗮𝘁𝗲.

In reality, although their precise methodology is typically opaque, the estimated value is just an average, calculated from that company's regional and sectoral peer group. That's why we call it a 'guesstimate'.

As I warn investors, it's like hiring an analyst after you were reassured that they got 70% in their final mathematics exam. You then learn that actually, they never showed up for that exam and this score was in fact a class average.

You can surely appreciate that if they had sat the exam, their score might have been very different from 70%.

3. 𝗔 𝘀𝗲𝗿𝗶𝗼𝘂𝘀 𝗽𝘂𝘀𝗵𝗯𝗮𝗰𝗸 𝗺𝗶𝗴𝗵𝘁 𝗯𝗲 𝗯𝗲𝗴𝗶𝗻𝗻𝗶𝗻𝗴 𝗳𝗿𝗼𝗺 𝗮𝘀𝘀𝗲𝘁 𝗼𝘄𝗻𝗲𝗿𝘀.

These are the institutions who ultimately own the capital that asset management firms invest (on their behalf).

Many asset owners trust the large legacy brands in ESG ratings; in fact some demand that their asset managers use one of them.

But many never realised how many of the 'reassuring' grades they review each quarter are based on guesstimated data.

Within the UK, some asset owners (public pension fund trustees) are even receiving advice that relying on estimated ESG data might constitute a breach of fiduciary duty.

What do we think?

We only use company-disclosed data behind any fundamental analysis we do - and if the company hasn't disclosed data that a recognised framework like the SASB Standards would expect to be disclosed, we make that clear and mark the company down for it.

Many of you might disagree that this is the best approach. But if you are going to use estimated data - you should at least know it's estimated data.

𝗕𝘂𝘁 𝘄𝗵𝗮𝘁 𝗱𝗼 𝘆𝗼𝘂 𝘁𝗵𝗶𝗻𝗸? When reviewing ESG data and scores for a company, do you see estimated ESG data as necessary gap filling?

(2) The double, triple, quadruple accounting problem at the fund level. The example given at the conference was a good one; jet fuel emissions.  

These could be counted in the scope 1 of the airline operating the flight, the scope 3 of any company whose employees are taking the flight for business, or the scope 3 of the company who refined the jet fuel.  

The SEC recently signalled they were scaling back their ambitious disclosure requirements on scope 3 [1], however some disclosure will be required under the new IFRS S2 standards [2]. So, there is mixed opinion from standard setters/regulators. 

Scope 4 (measuring avoided emissions) [3] is of growing interest to LPs who take climate investing very seriously; climate funds should invest in companies with technologies/approaches that will reduce global emissions significantly, with the acknowledgement that those companies are often in ‘unattractive’ industries like Steel, or Cement. 

Calculating their Scope 4 will reveal their positive impact - but again, estimations will play a large role in their quantification.

Read our Head of Research Hannah Bennett's thoughts here.

Please note these are the 12 largest positions only - you can see all 100 holdings by either filling in the form HERE or by requesting the full list via contact@integrumesg.com.

We recently created a post on LinkedIn explaining how regulators in the EU, UK and US are investigating ESG funds as there have been growing concerns that asset managers are promising more than they can deliver in an effort to sell their products.

There are fears that to meet the growing demand for ESG products many asset managers have simply rebranded their existing products rather than trying to create new ones, which has created concerns around greenwashing.

A recent analysis by PwC showed that of 1,061 Article 9 funds -- whereby a product needs to have sustainability as its “objective” -- showed that only 286 were new.  The rest were reclassifications of existing funds.

A probe of Article 9 products by Swedish authorities last month found “many cases” in which managers failed to provide necessary information, and as a result the Stockholm based regulator has warned that it will act to stamp out false ESG claims.

Furthermore - the EC has recently announced guidelines suggesting that the hurdle for an Art 9 fund should be 100% which has prompted firms like Amundi and Blackrock to remove Article 9 labels from some of its funds.

This has prompted the team here at Integrum ESG to use our 'Screener Tool' to create an Article 9 fund where every company meets the 12 specific sustainability objectives that a company must support if it is to be compatible with an Article 9.

We are happy to have been recognised as the "Best Global AI-Powered ESG Data Provider" by Corporate Vision Magazine in their annual Artificial Intelligence Awards.

This recognises the incredible work done by the Integrum ESG Machine Learning team.

Their contribution cannot be understated - creating and refining our cutting edge models so that they are able to capture, verify and display granular and relevant ESG data with unrivalled rapidity.

Might a clear legal standard of ‘sustainable’ emerge? The law firm Bates Wells believes that the 2015 Paris Climate Accord will be the legal standard – and the recent court ruling against Shell in The Hague set this as a legal precedent. How many investment funds are using a tool like THIS to evidence that their investments are consistent with a global warming scenario ‘well below 2 degrees’ (which is the objective of the Paris Climate Accord)?

So, ESG regulatory risks and legal liabilities may be mounting for fund management firms. The easiest way for any fund management firm to mitigate these risks is to state clearly that environmental and social objectives are not promoted by the fund, nor is ESG analysis systematically integrated into the investment process. Then all these mis-selling risks fall away.

It just seems that, fearful of losing investors, very few fund management firms want to do this.

The alternative is for these firms to build, or subscribe to, data tools that will map their funds to the Paris Accord, assess them against the 14 SFDR Adverse Indicators, and enable them to explain the key ESG risks in every existing investment.

How can Integrum ESG help meet these challenges?

- Fund managers are often relying on ESG ratings they cannot understand. When a regulator or investor asks "why are you comfortable with the ESG performance of this company?" they will struggle to answer, because the ESG score that has reassured them is a set of black boxes. The Integrum ESG dashboard presents glass boxes, with the reason for every score, for every metric, and the underlying data that explains and supports the ESG rating.

- Applying a Cambridge University model, the Integrum ESG dashboard calculates the extent to which your fund is aligned to the Paris Climate Accord - and surfaces the data that supports this calculation, company by company.

- The latest Integrum ESG dashboard feature, soon to be deployed, will provide the evidence of why, or why not, your fund can be classified as Article 8. It will map and assess the alignment of every uploaded fund to the SFDR Principal Adverse Indicators, and the EU Taxonomy Objectives.

Do you want to learn more about how Integrum ESG can help you meet these challenges? If so, CLICK HERE.

Recently we posted a poll on LinkedIn (which you can see HERE) which discussed how the plant-based meat market will develop and the main reasons why there has been a drop in the sales of plant-based meat in 2021.

One of the main reasons for this drop in sales is that consumers have now started to realise that many plant-based meats are highly processed, additive-laden and not very healthy.

This has prompted the team here at Integrum ESG to take a look at Processed Food companies that are best at managing health risks to customers.

See below for a list of the 14 companies that rank highest out of the highest possible score of 4.