German environmental, social and governance (ESG) research firm Oekom has teamed up with DPG, a German firm that measures the performance of institutional portfolios, to provide the latter’s clients with sustainability screening.
DPG has around 180 institutional clients, including pension funds and insurers, which have 6,000 stock and bond portfolios between them.
Oekom said that if a DPG client chooses to be screened, the process would be based on typical exclusionary criteria like controversial weapons (i.e. cluster bombs) and the violation of human and/or labour rights. The client also has the option of having the portfolio benchmarked against sustainable indices or other model portfolios, Oekom said.
DPG managing director Hans Pieper said the alliance was a direct result of DPG’s clients wanting to know how sustainable their portfolios were.“The analyses will now provide our clients decisive information on the chances and risks associated with sustainability,” Pieper added.
An alliance similar to DPG and Oekom’s has also been recently forged in the UK. There, proxy advisory firm PIRC and Inalytics, a firm that measures investment skill, have teamed up to provide pension funds with an analysis of the governance risk carried in equity portfolios. To assess that risk, PIRC will provide ratings drawn on around 100 data points in four main areas: the board, executive pay, shareholders and capital.
“The ratings provide an assessment of the presence or absence of particular governance structures and policies which have a material impact upon the company’s performance,” the firms said in a statement.