US-based compliance adviser to global asset managers ACA Group believes it can provide its clients with the critical ingredient they need to establish their ESG programmes – a deep understanding and relationship with sustainability data.
The New York-headquartered company has acquired data specialist Ethos ESG, which provides data and ratings across the sustainability spectrum. Ethos’ more than 350,000 ratings on stocks and funds will be available through ACA’s platform as well the Minnesota-based firm’s own infrastructure.
Dan Mistler, head of ESG advisory at ACA, said the purchase would enable the company to offer clients the information and tools they need to comply with incoming regulations and to fully exploit opportunities and establish risk controls within the sustainability environment.
“The intent is to enable those relationships with data that we think will allow our clients, portfolio managers, compliance professionals and all the people that we work with, to better understand what the data is and do better analysis of it,” Mistler told ESG Insight.
“That’s so important because there’s lots of managers that consume the data but don’t have full understanding of where it came from or what’s under it – and that can get them into trouble when they’re answering questions about what diligence they did on their provider.”
As well as ratings, Ethos provides impact data via an Impact Calculator that lets portfolio managers assess the real-world impact of potential investments. Formed in 2019, the company recently introduced a Carbon Neutral Certificate scheme that was developed with sustainable investment firm Change Finance. That gives visibility into the Scope One and Scope Two performance of mutual funds and exchange traded funds as well as information on their carbon offsets.
Its products are based on about 100 databases that take in the gamut of E, S and G performances culled from public sources. The company also has its own estimation methodologies to fill gaps in the ESG record and can scrape public domains for relevant data.
“Not only is taking into consideration the ESG impact of your decisions right on its merits, but greater transparency into ESG issues helps firms mitigate risk and make informed choices while growing sustainably,” Ethos ESG founder and chief executive Luke Wilcox said in a statement.
Mistler said ACA was attracted to Ethos partly because it provides clients transparency into its ratings, opening the bonnet on the calculations and underlying data.
“That’s not something that every data provider offers,” he said.
Mistler said ACA clients are also increasingly seeking impact data and that Ethos’ Impact Calculator would provide them with a potent means of assessing how their capital could do the most good.
“Until they really explore the data side, they’re not sure how to do it, and so we can provide them with that capability using Ethos services,” Mistler said.
ACA has been burnishing its ESG credentials after launching a global practice decicated to the space in January 2021. In June it named former United Nations Principles for Responsible Investing (PRI) European director Marie Luchet as its new managing director of ESG.
While this is ACA’s first acquisition of an analytics provider, Mistler said the company is always looking to see how it can supplement its organic growth with suitable purchases.
“You’re doing something really wrong if you’re if you’re not growing your business in ESG these days,” he said.
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