Committed to our analytical independence and in-depth knowledge of companies, we have chosen to develop our proprietary ESG methodology and internal analysis model.
Our ESG Analysis
Companies covered by our internal model + Access to a global universe via MSCI
countries rated on sustainability criteria
ESG Analysis of companies
Based on 34 criteria balanced between quantitative and qualitative data, our internal ESG analysis model measures the risks and opportunities for all stakeholders (shareholders, employees, customers, suppliers and civil society) in order to assess the “execution risk” of a company’s long-term strategy. Our methodology prioritizes the most material elements in each of the three blocks: Environmental (environmental risks and/or opportunities), Social (human capital, quality of the management team), and Governance (corporate governance).
Our analysis is conducted by our fund management and ESG research team in a collegial manner and enables us to identify the non-financial risks that each company might potentially face (corruption, reputation, regulatory risks, talent retention, product quality and safety, etc.), and to assess whether or not they pose a significant threat to the company’s ability to deliver on its strategy and official targets.
For us, human capital analysis is one of the key drivers of sustainable business performance. Having initiated an academic research monitoring process in 2010, we have integrated our human capital approach into our internal ESG analysis model around three key ideas: increasing awareness of the human factor, a broad definition of management (top management and middle management) and leadership.
Corporate governance is the second major focus of our internal ESG analysis model. We consider it to be a very relevant risk signal over a medium- to long-term investment horizon.
To complement our internal model, we also rely on the extra-financial rating provider, MSCI, which provides ESG analysis of approximately 8,700 companies worldwide. MSCI rates companies on a scale from AAA to CCC based on their exposure to long-term risks and opportunities arising from Environmental, Social and Governance factors. Ratings are derived on the basis of hundreds of criteria, drawing on company literature and other sources, covering 35 key ESG issues that are reviewed on a weekly basis. MSCI’s analyses are produced using the artificial intelligence and machine learning, as well as a team of 200 people. The MSCI extra-financial rating is particularly useful for companies not rated by our internal model.
ESG Analysis of sovereign issuers
The profile of sovereign issuers is assessed on the basis of traditional macro financial indicators, such as change in GDP, private consumption, public and private investment, industrial output, inflation, and unemployment rates.
However, in an increasingly complex world whose equilibria are in constant flux and in order to have the most comprehensive view possible of country risk, we felt it was important to supplement this approach with an ESG analysis based on a proprietary model that assesses sovereign issuers.
As part of its constant effort to integrate sustainable development criteria into the various asset classes it invests in, ODDO BHF Asset Management compiled a sample of 65 countries that account for the vast majority of currently outstanding sovereign debt.
ESG risk level per country