Case study

Competitive Benchmarking Study to Enable Our Partner to Expand in Western Europe and Win 2 Major Clients in Under 6 Months

Investment Research Services

Investment Research Services

Market Research

Business Situation

The client already shared a 5-year long association with SGA. The onshore team wanted to include ESG-specific analytical commentary in their equity research reports, as a response to the needs of the buy-side. Unlike the competition, the client wanted to make the ESG analysis an integrate part of the report instead of simply stitching it at the end as an addendum.

SGA Approach

  • SGA’s existing offshore team of investment research analysts for the client were provided extensive training on ESG basics and relevant framework
  • The training also included identification and alignment of materiality issues for individual industries covered by each SGA analyst based on SASB’s guidelines
  • The team was augmented with an in-house ESG subject matter expert (SME) for a period of 3 months to collaborate with the research team
  • SGA team prepared a rating/scoring methodology encompassing important parameters that are applicable to all the sectors covered by the team
  • The framework was further customized for individual sub-industries to incorporate the intricacy and nuances in the materiality of a specific group of companies
  • Based on the framework developed, SGA team analyzed the ‘as-is’ state of each of the companies and benchmarked companies within relevant groups for individual sub- industries.
  • SGA team independently evaluated each ESG pillar and its components, prepared opinion-based commentary, and assigned a 3-point rating for KPIs under each pillar
  • The findings of the ESG scoring and benchmarking were integrated with the investment rationale of the company to present a holistic view of the company to the audience
  • On the front page of the research reports, the ESG scoring was highlighted along with the valuation-based recommendation for discerning investors

Benefits and Outcomes

  • Delivered differentiated content in equity research reports, not only incorporating ESG scoring but also integrating it with the investment opinion
  • Followed a detailed approach using both i) standardized ESG framework that is comparable across industries ii) nuanced materiality assessment and scoring for companies across sub-industries
  • Prepared an actionable research product for discerning money managers that explores in depth the sustainability issues of covered companies

Key Takeaways

  • In-house subject matter expertise in investment research as well as ESG research
  • Customized framework for nuanced assessment of material ESG factors for the entire coverage universe across sectors
  • A well-rounded perspective on investment potential, blending both financial as well as ESG performance
  • Differentiated research product providing a clear edge over the competition

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