ESG investing has been shown to provide alpha, but not all ESG datasets are created equal. For those evaluating data, a best-practice checklist should include ESG data that captures not just negative events but positive ones, and which is both timely and material.
Positive & Negative Events
With a focus on both positive ESG behavior as well as controversies, TruValue Labs goes beyond risk identification by uncovering opportunities hidden in unstructured data.
Timeliness is a key factor for assessing ESG performance. Truvalue Labs updates its universe of companies daily. Other providers may rely on human updates to ratings, which are infrequent for most companies, perhaps quarterly or once a year.
The idea of giving primary consideration to ESG factors that are financially material to a company is relatively new, but is well-founded and increasingly understood to be a best practice.
Luckily, ESG factors that are financially material for each industry have been carefully constructed by the Sustainability Accounting Standards Board, or SASB. Established in 2011, SASB is an independent, non-profit, private-sector standards setting organization whose board includes a former chair of the SEC, former FASB Chairman, and at one time, Michael Bloomberg. Its standards are a public good, much like FASB’s standards are.
Truvalue Labs provides financially material ESG data tailored to SASB’s standards for each industry, and that allows true apples-to-apples comparisons like this analysis of Tesla and GM.