Product Innovation</li></ul>Categories<br />More than 250 indicators (calculated from data point values)<br />Indicators<br />ESG Data and Framework<br />Overall performance<br />Company overview<br />Link to public data sources (Raw Data)<br />DataPoints<br />More than 750 data points<br />4<br />
Integrating ASSET4 Data into Thomson Reuters Products<br />Thomson Reuters CreditViews on Eikon<br />Ability to access ESG scores and integrate into credit analysis<br />ESG Datafeeds<br />Core feed of 23 levels of scoring<br />Premium feed of 1000+ data items <br />ESG in Datastream (Feb. 2011)<br />Core package (120 items) on Datastream premium<br />Upgrade with access to all data items<br />Complete ESG data integration into Eikon (2011)<br />5<br />
ESG: a Proxy for Management Quality<br />9<br />According to an Issue of The McKinsey Quarterly:<br />80% of CFOs and CIOs believe that ESG information can serve as a proxy for the quality of a company’s management.<br />Source: The McKinsey Quarterly, Feb. 2009<br />
Average ESG Scores andCredit Downgrades/Upgrades<br />
Examination of ESG performance and CDS spreads<br />CDS Spreads measure the cost of ensuring against default and the riskiness of a bond<br />Examined the relationship between CDS spreads and ESG scores <br />Segregated ESG performers into 4 quartile groupings<br />2005-2007<br />2008-present<br />Hypothesis: Higher ESG performers should have lower CDS spreads<br />
CDS Spreads vs. ESG Performance 2005-2007<br />
Correlation ESG/CDS for US Companies 2008-present<br />
Conclusions<br />ESG a positive signal for credit risk<br /><ul><li>Negative correlation with CDS spreads
Signal strongest as rank correlation with US companies
Best used to aid in a risk profile of the company</li></ul>Environmental and Social pillars showed most positive signals<br /><ul><li>Likely due to dramatic differences in disclosure and performance within regions</li></ul>ESG a stronger signal for companies with higher credit ratings<br /><ul><li>Short term financial risk less determinant of CDS spreads
Useful in determining risks for companies with stronger risk profiles</li></ul>Can be useful as additional screening to financial analysis<br />
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