Waqar Syed, MBA 720-683-6705
ATB Research has taken a major initiative to incorporate environmental, social, and governance (ESG) criteria into its investment process. As a start, we have introduced ESG research in the Energy Infrastructure and Energy Services sectors. In the full report, we highlight the following key points:
A Trip Down Memory Lane
The market crisis of 1929 led to the creation of the Securities and Exchange Commission (SEC) in 1934 and disclosure of material decision-useful information became the bedrock for the creation of efficient markets. The definition of what is material has evolved as the market moved from historical cost accounting to incorporating forward-looking information to value companies. Given government, public, and investor scrutiny of ESG issues, and rising carbon prices around the world, incorporating ESG into the investment framework has now become a fiduciary duty of most major institutional investors. Disclosure of such information is now incumbent on corporate managements to not only attract new capital, but for many, it may already be a legal requirement.
Why We Chose SASB as a Basis for ESG Research
ATB Research is using SASB standards as the basis for its ESG research, although many other formats/ frameworks are available as well. Our rationale is as follows:
What is ATBesg?
While ATB built its ESG analysis on SASB standards, we also found that corporate disclosures on SASB criteria were not complete, and SASB “E” and “S” criteria alone didn’t give a fair picture. Moreover, SASB’s governance criteria were too industry-specific and didn’t reflect the investor interest in evaluating governance structure and policies holistically. As a result, we developed our governance checklist based on recommendations of the CFA Institute and the International Corporate Governance Network (ICGN). Therefore, our ESG analysis is called ATBesg.
Energy Infrastructure ATBesg Highlights
The sector has several attractive-return, low-carbon emission initiatives in progress. ATBesg ranks the sector on Best-In-Class (BiC) and Best-in-Momentum (BiM).
Energy Services ATBesg Highlights
SASB disclosures within the Energy Services industry are weak and we made several adjustments to create the ATBesg framework.
© 2022 ATB Capital Markets Inc. All Rights Reserved. ATB Capital Markets Inc. is a member of IIROC and CIPF (Canada) and ATB Capital Markets USA Inc. is a member of FINRA and SIPC (USA).
ATB Business is a unit of ATB Financial which provides financial services to commercial enterprises from small businesses to corporates.