Angela Ashton

Independent investment consulting firm, Evergreen Consultants, has launched a new responsible investing (RI) index, based on a unique grading system that focuses on an investment manager’s intent and actions, and not merely a set of portfolio metrics.

The Evergreen Responsible Investing Grade Index (ERIG Index) uses a survey-based top-down assessment that aims to eliminate any potential greenwashing by evaluating the depth and breadth of a manager’s actual process (actions), with recognition of the alignment to their beliefs about RI (intent).

Evergreen Founder and CEO Angela Ashton says it is time to move beyond assessments of fund managers’ RI capabilities based on bottom-up ESG metrics.

“At Evergreen, we think the bottom-up approach is a good way to check a manager’s portfolio but it is not sufficient to prove the style,” Ashton says.

“A portfolio with a certain sustainability score does not necessarily mean the manager is an RI manager. It is a necessary, but not sufficient, condition to prove the style.

“We look at what the manager does and compare this to others in the marketplace. The bottom-up analysis of the manager’s portfolio can play a part, but it is not the complete analysis in our view.”

Evergreen is a member of the Responsible Investment Association Australasia ( RIAA) and has adopted RIAA’s Ethical Investment Spectrum, a framework that sets out the various approaches to RI in seven categories.

Those categories include ESG integration, negative screening, norms-based screening, active ownership, positive screening, thematic/sustainable investing and impact investing.

The ERIG Index focuses on which of these capabilities a manager offers and their strengths and weaknesses in each, assigning a grade to each category.

This approach provides a multi-faceted look at a manager’s RI capabilities and represents the manager in a more accurate manner than one simple score.

Managers complete a questionnaire, which was designed using RIAA’s seven categories. The questionnaire explores the manager’s high-level beliefs about each RI capability they offer and the depth and breadth, strengths and weaknesses of their approach.

Evergreen also draws on the United Nations-backed Principles for Responsible Investment, which has a framework for selecting investment managers.

Currently, Evergreen is surveying 180 funds for the Index.

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