As innovators and leaders in sustainability and investment, we understand the expertise and attitude required to achieve outperformance and outcomes from ESG investing.
ESG cannot be ‘bolted on’ to an investment process or be the domain of one analyst in a team. It must be an area of expertise for all. Knowing how to gather, analyse and integrate sustainability data as an essential part of research is fundamental in forming a complete view of an asset’s long-term potential.
What defines a leading ESG investor?
Our Responsibility Office oversees and advances ESG and stewardship integration in all our investment strategies and reports directly to our CEO on the integrity of their approaches. This helps to ensure we focus on Sustainable Wealth Creation.
Our proprietary tools
Enabling best-practice ESG and stewardship integration
We developed proprietary ESG-analysis tools before off-the-shelf data sets became available and continue to innovate through industry and academic research partnerships, and by deepening the integration of engagement insights from EOS at Federated Hermes.
To learn more, click on the tiles below.
Our ESG score for listed companies, capturing both the current sustainability performance and direction of travel. It is calculated by combining our ESG research and engagement insights with sustainability data from third parties including Sustainalytics, Trucost and Bloomberg.
The Dashboard provides ESG metrics at the portfolio and company levels, integrating our ESG research and engagement insights with information from third-party data providers. Company-level data are interrogated to show environmental (E), social (S) and governance (G) indicators which are used to form E, S and G scores. In turn, these are used to calculate a headline score, the QESG Score, to gauge the sustainability performance of a company and whether it is likely to improve, worsen or plateau.
Our engagement database, used predominantly by the stewardship specialists in EOS at Federated Hermes to record their interactions with companies, engagement objectives and the progress made towards achieving them. The contents and conclusions drawn from strategic and sustainability dialogues with companies helps inform investment decisions and deliver specific outcomes.
Helps assess the governance quality of companies through targeted information about how they are run. It flags any companies that fall below Federated Hermes’ expectations, as defined by EOS at Federated Hermes in the landmark Responsible Ownership Principles, and compares the company to peers in its industry, sector and country of operations to provide a comprehensive overview of how it is governed.
Enables fund managers and engagers to identify carbon risks in portfolios of listed securities and individual companies that are, or might become, more exposed to emissions in the future. Importantly, it also incorporates our stewardship intelligence and can identify companies that are priorities for engagement on emissions and their progress against objectives.
Data points include:
- Measuring the carbon risk and footprint of an investment fund relative to its benchmark as well as listed companies relative to their peers, including Scope 1, Scope 2, and Scope 3 emissions.1
- Calculating the value at risk for an investment capability fund according to different carbon pricing and policy scenarios.
- Identifying companies with which carbon-focused engagement should be initiated or intensified.
- Gauging the level of carbon risk being engaged on within portfolios – and the progress achieved.
Scope 1 emissions: all emissions from activities directly controlled by a company.
Scope 2 emissions: indirect emissions from electricity purchased and used by the organisation.
Scope 3 emissions: all other indirect emissions from activities of the organisation, occurring from sources that they do not own or control.
Depicts the ESG performance and engagement activity of specific holdings and in aggregate across portfolios relative to their respective benchmarks, and relevant engagement intelligence. It can be used to evaluate a strategy’s ESG and engagement performance over time on measures including carbon intensity, voting decisions relative to the benchmark, and engagement themes and progress.
Sustainability in action
Looking for authenticity in investing sustainably? Examine our evidence.
Seeking clarity on sustainability? We provide definitions that we stand by.