TechRules and ESG: simplifying a complex issue

Integrating the new regulation into state of the art solutions for financial institutions

ESG is the new regulation that stands for Environmental, Social and Governance and here at TechRules we are already working on adapting our company to this new law that measures the commitments to ecological sustainability, our community and our corporate governance. This is why ESG parameters are now integrated in our solutions, following the MiFID II standards.

Our complete wealth management solution, Tower, has already integrated this option so that you can now see the ESG score in the asset form, in addition to in the portfolio report and the investment proposal. It is expected that new legislative proposals will be approved during 2020, so they will be effective during 2021 and 2022.

Tower will show the sustainability score based on the three factors: environmental, social and governance.  The ESG controversy score measures the company’s exposure to environmental, social and governance controversies and negative impacts reflected in the global media.

View the aggregated impact of investments

The score range goes from 0 to 100, meaning that a company with a score of 50 is considered average in relation to a group of similar businesses. A score of 70 means that the company is doing better than most businesses inside its group and a score of 30 would mean totally the opposite.

This new regulation comes from the need to bring these topics back to the top of the main issues companies should be dealing right now. With ESG, businesses get a score based on environmental, social and governance factors, to see how they are performing taking all these factors into consideration. In a society where the importance of good practices is greatly increasing, it is extremely valuable that software providers adapt their platforms to meet the new regulation.

Leading the demand of green investing with transparency for both wealth managers and investors 

Advisers and wealth managers are using these non-financial factors in their daily work, so they can have a more complete view and decide based on other possible risks and growth opportunities. With this regulation, companies are being analysed and their social initiatives, how they manage talent or the relationship between employees become issues as important as paying taxes. 

Following MiFID II standards, this integration of ESG parameters with our solutions means that institutional investors and asset managers need to integrate and control all ESG factors in their risk management processes. Transparency is another important issue: companies need to deliver complete and detailed information in all their reports. 

Accompanying Financial Institutions in the review of their investment process, incorporating the new ESG approach and building their offer of Model Portfolios with an ESG bias. 

Through our Model Portfolio Service (MPS), we help our customers to find the best bespoke solutions that allow incorporating the impacts of ESG in each of the phases of their investment and portfolio construction process: analysis and selection of ESG asset classes, analysis and choice of representative ESG benchmarks for each asset class, analysis and validation of risk budgets, exposure and ESG score by investor profile, construction of new product ranking models incorporating ESG criteria, backtesting of ESG portfolios and cross checking with traditional non-ESG portfolios, generation of new reports of ESG portfolios, including the new ESG approach.

You can download more information here!

Would you like to talk to us? Email us on marketing@techrules.com