Institutions

German asset management body launches ESG scoring tool

The development was driven by investor demand, say experts

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Germany’s industry association for financial analysis and asset management, the DVFA, has launched a tool to help investors create in-house sustainability scoring policies.

It was developed by the DVFA’s sustainable finance commission, comprising members from firms including State Street Global Advisors, Allianz Global Investors and Union Investment. 

Dirk Soehnholz, a Commission member from model-portfolio provider Diversifikator, told RI in a personal capacity that the development of the tool had been driven by an increasing number of investors asking questions on how they could develop a sustainable investment policy. 

“Many thought that they would wait for the EU sustainable finance taxonomy to come into place. But it was pretty clear from the start that the taxonomy would take a long time and would not be as comprehensive or as broad as we think at the Sustainable Finance Commission.”

The Policy for Responsible Investment Scoring, known as PRISC, has eight categories that investors can customise. 

  1. Exclusions (“avoid bad investments”, exclusions or negative screening)

  2. Impact/SDG score (“good” investments or positive screening)

  3. ESG score definition (aggregated versus differentiated ESG score)

  4. ESG score application (best-in-universe versus best-in-class)

  5. ESG score cut-off (ESG minimum requirements)

  6. ESG score measurement frequency (Incidents)

  7. Exercise of voting rights (Voting)

  8. Active attempts to exert influence (Engagement)

Soehnholz, who has a blog on how to use the tool, says: “The idea is that we didn’t want to have a standard tool because we know that every investor has many different opinions about what they think is sustainable.

“I don’t think voting and engagement is very important, but others do. So the weight of the criteria  can vary – you can add additional criteria or delete criteria out of the tool. You can use it to create a new product or assess an existing product. And you only need a very few questions at a very high level to have an idea of how sustainable the product is compared to your own individual policy.” 

PRISC is currently only available in German, but could be translated into English if there is interest.

Members of the DVFA sustainable finance commission who helped develop the tool are:

Dr. Julia Backmann, Allianz Global Investors 

Andreas Feiner, Arabesque Asset Management

Dr. Gunnar Friede, DWS Investment

Carlo Funk, State Street Global Advisors 

Sonja Kimmeskamp, HSBC Global Asset Management

Christoph Klein, ESG Portfolio Management 

Imke Mahlmann, imug Beratungsgesellschaft für sozial-ökologische Innovationen

Marianne Ullrich, Deka Investment 

Dr. Henrik Pontzen, Union Investment Institutional 

Dr. Rupini Deepa Rajagopalan, Berenberg Bank

Michael Schmidt, Lloyd Fonds 

Prof. Dr. Dirk Söhnholz, Diversifikator 

Claudia Volk, Sustainalytics

Berenike Wiener, Evangelische Bank