Kellogg School of Management



Innovest: Products and Services (from website)Research and RatingsCompany Profiles Innovest?rates more than 2,000 publicly-traded companies from the world's major stock exchanges.?Our ratings and subsequent company profiles evaluate corporate performance in four strategic areas:?Environment, Strategic Governance, Stakeholder Capital and Human Capital. Using?Innovest's Intangible Value Assessment methodology, Innovest analysts evaluate a company's standing with regard to more than 120 performance factors, including innovation capacity, product liability, governance, human capital, emerging market, and environmental opportunities and risk. The result is a detailed analysis of a company's standing, relative to sector peers, on the four strategic pillars of?Innovest's Intangible Value Assessment: Environment Strategic?Governance Human Capital Stakeholder Capital ? Relative corporate performance is communicated via a simple Rating signal of AAA to CCC coupled with a company profile. All of Innovest’s company research is delivered via I-ratings, a global database that provides access to Innovest's complete library of proprietary company ratings, sector reports, carbon beta risk analysis, and other specialized research materials.??? Indices that Innovest covers:?MSCI WorldMSCI EuropeRussell 2000S&P500ASX 200Nikki 225FTSE SmallcapFTSE GlobalFTSE Europe 300Dow Jones EurostocksCAC 40 Sector Reports Detailed analysis of extra-financial best-practices and trends, including product liability.?? Innovest's sector reports provide an in-depth assessment of key drivers of risk and return for a given industry and include companies' relative performance against these drivers. The reports typically include around 150 - 200 pages of sector analysis and benchmarking information as well as the individual company ISVA reports. Please click on the below links to access an excerpt to one of Innovest's recent sector reports. i-Ratings I-Ratings is a global database that provides access to Innovest's complete library of proprietary company ratings, sector reports, Weekly Stock Monitors, Screening services and other specialized research materials. I-Ratings is investors' one stop shop to Innovest's research and analysis. Learn how different sectors are preparing for emerging environmental regulations, and which companies exhibit advanced preparedness. Access over 1,750 risk profiles summarizing companies' strategies and activities in emerging markets. Find out which companies exceed basic compliance on issues of corporate governance. Discover which companies have gained a competitive advantage through superior human resource management. I-Ratings can be designed to meet your investment or research objectives. If you are interested in learning more about how I-Ratings can benefit your company, please contact us of an on-line virtual tour of the site.Screening ServicesGlobal Compact Plus Measures companies' performance and strategies against the 10 principles of the UN Global Compact. Innovest's Global Compact Plus Screen measures companies' performance and strategies against the 10 principles of the UN Global Compact. Using the screen, investors can determine if companies in which they wish to invest are adhering to generally accepted international norms and principles derived from: The Universal Declaration of Human Rights The International Labor Organization's Declaration on Fundamental Principles and Rights at Work The Rio Declaration on Environment and Development The Innovest PLUS The “plus” in the Global Compact Plus refers to three major and unique attributes: It provides a qualitative, sector-specific assessment of the materiality of the risk posed to each company; It goes beyond a pro forma assessment of what companies are saying, and focuses on what they are actually doing; It provides a best-in-class company ranking vis-à-vis same-sector competitors, recognizing that there can be wide variation in signatory companies’ degree of compliance with the Global Compact Principles.? The Innovest Assessment Process? Sector-Intensity Rating:? Not all sectors are exposed to the same levels of risk, and different sectors call for different policies. For example, a company in the oil and gas sector needs to have a human rights policy in place that addresses issues such as land-use and the protection of indigenous cultures; a software company, on the other hand, is unlikely to be exposed to the same degree of human rights risk and its policies may not need to be as comprehensive.? Innovest gives each sector a 'sector-intensity rating' in each of the four Global Compact areas. These ratings determine how robust company policy must be to avoid unnecessary risk.? Materiality: Many previous screening methodologies have suffered from an overly mechanistic, literal-minded approach which implicitly treats all risks in all industry sectors as being of equal significance.? As an investor-oriented tool, however, Global Compact Plus places particular emphasis on the materiality of the business or investor risk, on both an issue-specific and sector-specific basis. Strategy and Performance:? In assessing whether companies are meeting the principles contained in the Global Compact, Innovest looks at both strategy and performance. When assessing strategies, our analysts look at policies, management systems and initiatives in place to ensure compliance. Companies without robust policies in place are exposed to greater potential social and environmental problems and in turn expose investors/partners to greater risk. However, strategy analysis only tells half the story, and Innovest conducts further research to assess actual performance, looking for instances where companies have breached the international standards embraced in the Global Compact.? Only after strategy and performance have both been analyzed can a complete Global Compact Plus?compliance assessment be derived.? Evaluation: Each company’s final risk rating is a synthesis of at least three factors: the overall level of and materiality of the risk exposure, given the specific nature of the company’s core business and its geographic scope of operations; the robustness of its risk management architecture; and its actual performance, relative to same-sector peers. ? Color codes facilitate the intuitive understanding of the final assessment proposed:? Green: no material case identified Amber: no material case identified but on watch Red: potentially material cases identified that should draw the investor attention to the company??Activities Screen Offered in an easy-to-use on-like database, Innovest’s Activities Screen evaluates company involvement in 15 activities typically screened by mission-oriented investors. Innovest can tailor our Activities Screen to meet your investment needs.?? allows investors and other organizations to be aware of companies whose business activities may conflict with their specific investment / partnership criteria. The Activities Screen provides data on the involvement of corporations in 15 areas. EnvironmentalSocialPolitical / ReligiousGMOs / Genetic EngineeringAlcoholContraceptionPesticidesGamblingPolitical donationsLoggingTobacco?NuclearAnimal Testing??Meat Sale ??Fur??Pornography ??Infant Nutrition??Military/Weapons (including land mines)??Before each activities screen is undertaken, a company is classified as either a Vendor or a User based on its business activities.?? As with the Global Compact Screening Tool, Innovest does not make the final investment/partnership decision for any screened company. Instead, Innovest again uses a three level Materiality assessment to highlight potential risks (color coding is consistent with the Global Compact Screen assessment system).? Materiality is determined by the percent of revenue a company generates from the given Activity. Weapons Manufacture of armaments may be considered by some to be in conflict with goal of sustainable development, if manufacture goes beyond the limited need to protect national security. As well as causing death and injury, armaments can cause damage to natural and man-made capital. This screen includes the manufacture or sale of armaments, weapons systems or critical components thereof, as well as land mines. Tobacco Tobacco is often viewed as at odds with sustainability goals due to health impacts on individuals and the cost of treatment. This screen includes information relating to the manufacture, distribution or sale of tobacco products. Nuclear Power Although a possible low carbon energy source, some may be concerned about environmental and health risks. This screen includes involvement in ownership or operation of nuclear power plants, uranium mining, reprocessing of nuclear fuel, and manufacture of nuclear power facilities. GMOs Debate on the benefits and risks of using genetic technology continues. Due to concerns over ability to protect consumers and environment, this screen allows clients to take a precautionary approach. This includes involvement in commercial release of GMOs and/or xenotransplantation research. Contraceptives Abortion and contraception would be key concerns and in conflict with the teachings of the Catholic Church or other religious groups. This includes involvement in the production, sale or distribution of contraceptives.Animal Testing This may be regarded as fundamentally undesirable by some clients. This screen includes involvement in the provision of animal testing services or use of primates and commercialization of xenotransplantation. The screen includes any animal testing involvement in regard to the development of cosmetics, household products, food additives, chemicals for non-medical products. Alcohol Production, sale and/or distribution of alcohol can be linked to excessive drinking, underage drinking, with negative social and health impacts. This screen includes any involvement in production, sale and/or distribution of alcohol and would cover any irresponsible marketing policies. Pornography Concerns regarding abusive and degrading portrayal of individuals, can contribute to sexual discrimination, exploitation and violence. Note involvement in production or distribution of pornographic material, or ownership/management of 'adult entertainment' establishments. Gambling Some concerns may exist due to negative social impacts on vulnerable groups. This screen includes involvement in management or ownership of gambling facilities such as casinos, lotteries and betting companies. Infant Formula This screen relates to any companies' marketing practices that violate the International Code of Marketing of Breast Milk SubstitutesSovereign Screen Assessment A tool for analyzing the policies and performance of countries in relation to international standards. Innovest's Sovereign Screening provides investors and international organizations with a cutting-edge?tool for analyzing the policies and performance of countries in relation to international standards. Please contact your local Innovest representative if you would like a sample of this new Assessment Tool. Innovest Strategic Value Advisors announces today the launch of its latest investment research tool - the Sovereign Assessment Tool. Innovest has widened its screening services to provide investors and international organizations with a cutting-edge tool for analyzing the policies and performance of countries in relation to international standards. This tool complements Innovest's growing suite of screening services and will be of interest to investors requiring research and analysis to screen government bonds and organizations requiring information regarding governmental partners.? The sovereign assessments review potential investment risks and assesses country level standards against a range of issues similar to those screened for Innovest's Global Compact Assessment Tool, namely policy and track record in the areas of human rights, labor rights, the environment and governance. A second element of the sovereign screening tool assesses financial probity issues such as securities regulation, transparency, banking supervision and money laundering. The country screens will also consider the arms trade looking at conventional weapons, nuclear weapons, chemical weapons as well as landmines and involvement in conflict.?? Thus far, the screening tool focuses on the EU-25 countries and the Emerging Markets.? The work is carried out by a dedicated screening team and supported by Innovest's 50-strong analyst team. The sovereign screening service forms part of Innovest's wider screening service which includes the Global Compact Assessment Tool, activities screening and customized screening services.Index Models & Customized Screens Innovest can develop customized investment screens and index models to meet clients' investment objectives. One such example is the Community Investment Index, designed for the F.B. Heron Foundation in order to create an investment vehicle that reflects the values of the Foundation's mission. A sophisticated methodology was developed to evaluate a company's efforts to empower underserved individuals and communities in the United States through its business strategy. Approximately 400 of the companies in the S&P 500 and S&P 400 were identified for having superior approaches to and track records in 'helping people and communities to help themselves'. The Index is updated on a quarterly basis and is currently in the process of its Beta test.? Thus far, the Index has outperformed its benchmark with the S&P 500.ConsultingCarbon Finance Practice In-depth research on absolute risk exposures for individual companies,?companies' capacity to manage these risks and their ability to capture the upside commercial opportunities.The financial risks and opportunities from climate change can vary dramatically – both among and even within industry sectors.? To capitalize on climate-related risks and opportunities, institutional investors need high-quality, company-specific research and analysis.? As with all investment research, information obtained from questionnaires is of limited value at best; what’s needed is sophisticated, in-depth, financially-oriented research on the competitive dynamics of each industry sector, and direct, real-time interviews with company executives to fully comprehend their strategies. Carbon Beta?Innovest’s proprietary Carbon Beta? analytics platform translates that in-depth research into actionable insights for investors. Innovest’s models address all three of the critical factors:Absolute and relative risk exposures for individual companies. Their capacity to manage these risks. Their ability to identify and capture the upside commercial opportunities being created.Innovest has been a pioneer in those environmental, social, and governance parameters that were shown to have the greatest impact on companies’ financial and share price performance.? This analysis allows clients to better manage the associated risks in their existing portfolios and stock selection processes.? Innovest’s Carbon Beta? platform, which currently covers over 1,500 international companies in high-impact sectors, is an extension of this proven methodology.? It is supported by Innovest’s 50-strong team of global sector specialists, as well as many years of empirical stock market return attribution research to identify the most financially relevant risks and value drivers.Innovest’s Carbon Beta? platform offers clients the following “climate-enhanced” analytical tools and investment products:Carbon Value at Risk Portfolio Audits Carbon Strategic Governance Advisory & Executive Training Services Customized research and consulting Leading-edge investment products, such as the Carbon Beta? Basket long/short equities strategy; an “enhanced-beta” bond strategy; “green” real estate securities funds; and a cleantech private equity fund of funds.The Variability of Climate RiskClimate Risk can vary dramatically, both among and within sectors and consequently, Investors need to know which companies are at greatest risk! Investors and fiduciaries would be well advised to scrutinize their portfolio for climate risk.? We welcome an opportunity to assist you.Portfolio Value Audit? Innovest's Portfolio Value Audit? is an analytical tool for investors and fiduciaries wishing to test and explore the potential portfolio performance of addressing sustainability issues, without disrupting their existing investment processes or placing hard investment assets at risk. The result is a detailed analysis of how portfolios would be affected if Innovest’s management quality overlay were applied.The Benefits of a Portfolio Value Audit?Identifies portfolio risks and opportunities typically overlooked by traditional securities analysis. Allows clients to experiment initially without putting any funds at risk. Meets emerging fiduciary requirements. Allows clients to refine their investment strategies, applying a sustainability "tilt" only where? it will add the greatest risk-adjusted returns. Aligns the client's investment strategy more directly with mission and social/environmental policy concerns. Provides a baseline against which plan sponsors and asset managers can benchmark? portfolio improvement over time.?? How the Portfolio Value Audit? WorksThe Portfolio Value Audit? can take one of two forms:1.? A live, real-time portfolio performance simulation; rather than analyzing hypothetical portfolios, the audit uses as a benchmark and starting point the actual portfolios that institutional clients and their asset managers have in place.2.?? A static analysis of the client's portfolio at a given point in time, with the environmental and social risk exposures compared to those of the portfolio benchmark. In most cases, this diagnosis is followed up and monitored with the portfolio managers, who are instructed by the client to take any opportunities to upgrade the portfolio "sustainability quotient" over time as new investment choices are made.During the Portfolio Value Audit?, the client's portfolio stock holdings remain exactly as they are; what changes are the relative weights each stock receives in the portfolio. New weightings are established, based on each company's relative environmental, social, and governance performance rating from Innovest.What You Learn About Your InvestmentsAfter the audit is completed, a sophisticated attribution analysis is performed to ascertain: How much of the over/under-performance of the simulation portfolio was due to the non-traditional risk factors examined by Innovest, and what proportion can be explained by more conventional investment factors.?Which investment styles, capitalization levels, and geographic portfolio focus is best suited to adding performance benefits through a sustainability overlay to a live portfolio going forward. Specialized Reports Client-driven Specialized Reports provide a cutting edge window into rapidly evolving investment issues. These specially commissioned reports evaluate the investment impact of emerging regulations and trends. Clients for this kind of custom work include major industrial companies, governments, institutional investors and think-tanks. Recent examples of thematic research conducted by Innovest include: NanotechnologyAn assessment of the investment risks and opportunities within emerging nanotechnology applications, including a Nanotechnology Index comprised of companies with the best commercial prospects in the field. Carbon Disclosure ProjectInnovest coordinates the research for the global Carbon Disclosure Project (CDP), which in its fourth year, has come to represent more than 155 investors with assets of $30 trillion. Financial Impact of Phase OutAssessment of how emerging mandates e.g., Waste Electrical and Electronic Equipment directive (WEEE), Restrictions on Hazardous Substances directive (RoHS), and End of Life Vehicles directive (ELV)) that require the phase out of toxic metals in production will impact market dynamics. Intensive financial analysis of the business impacts of HIV/AIDs Climate Change and the Financial Services IndustryPrepared for the United Nations Environment Program, Finance Initiative ? GMO ReportRisks to shareholders of pursuing the development of genetically modified agricultural crop varieties The Future Of The Forest Industry; Maximizing Environmental Benefits And Market Returns Analyses of the extent to which Sustainable Forest Management (SFM) practices add value for investors.Energy ManagementComprehensive analysis for the U.S. Department of Energy on energy management and renewable energy performance in the chemical, electric utility and REIT sectors. Strategic Engagement Services Innovest’s Strategic Engagement Services enables investors to both enter into dialogue and ‘engage’ companies on areas to improve their governance and sustainability performance while maintaining the investors’ existing portfolio construction and asset manager selection.? What is Innovest’s Approach to Engagement?? Some of the world’s largest asset managers subscribe to Innovest’s Strategic Engagement Service.? Innovest’s Strategic Engagement Services is based on what is widely recognized as the premium extra-financial research platform, with coverage of more than 1,700 global companies across 60+ industry sectors.? Using our rigorous analysis presented on-line via the Innovest Global Compact Plus screening tool and Innovest Company Profiles and Sector Overviews, clients are able to assess company performance on a wide range of issues and choose which issues are most pertinent for engagement.? Issues covered include:Strategic Governance????Traditional Governance Concerns??Intellectual Capital/ Product Development??Product Safety??Environment???Greenhouse, Energy and Climate Change??Water and Natural Resource Usage??Environmental Management Capacity??Historic Liabilities??Leading/Sustainability Risk Indicators??Strategic Competence to Mitigate Historical and Existing Industry RiskHuman Capital??Employee Motivation & Development??Labor Relations??Health & SafetyStakeholder Capital??????Strategy???????Customer/ Stakeholder Partnerships????Local Communities??????Supply Chain???Human Rights/ Child and Forced Labor??Oppressive RegimesThe Innovest Strategic Engagement Service ProcessStep 1: ?The client and Innovest work together to identify the key criteria that the client wishes to identify for future engagement.? These may be either customized issues or the client may prefer to benchmark corporate performance against recognized international norms such as the UN Global Compact.? The Innovest Global Compact Plus screening tool analyzes company strategy and performance on:??human rights;??labor rights; ??environment;? and ??anti-corruption.? Step2:?A ‘Pre-Engagement Report’ is regularly sent to the client featuring a specific sector/issue reviewed; a list of companies recommended for engagement and a list of specific questions suggested for engagement. Step 3: ?Client reviews the Pre Engagement Report and advises which companies Innovest should contact on the client’s behalf. Step 4:?Innovest’s analysts professionally engage the selected companies either directly (via written communication and face to face meetings), or via the client’s existing fund manager panel and gather relevant information. Step 5: Innovest prepares a ‘Post Engagement Report’ with the results of the engagement process including specific company Reponses.? Step 6: ?Client and Innovest do regular review of Step 1 to initiate further engagements.? ?New sectors reviewed and reported upon. Step 7: Innovest monitors the company on an ongoing basis to and reports on any change in corporate performance relevant to the engagement criteria.? Asset Management Sub-Advisory While Innovest does not manage money itself, it does serve as sub-advisor, providing its proprietary alpha overlays to clients in a range of products and investment styles.? By working with traditional asset managers (rather than competing with them) Innovest can provide institutional clients with the best insights, ideas, and analysis of both organizations. The investment funds on which Innovest currently serves as direct sub-advisor provide clients with a wide range of options with respect to style, risk/return characteristics, and geographic focus: ? Geographic FocusRisk/Return ProfileGlobal Large Cap (MSCI World)??Enhanced index Active quant Active Pan-European Equities (MSCI Europe)Active? U.K. Large/Mid Cap (FTSE 350)Enhanced index Emerging Markets (MSCI EMF)Active International Large CapActive U.S. Large Cap CoreActive ? Whether you are an active, passive, enhanced index, long-only, long-short, value, growth or sector focused investor, Innovest's? Intangible Value AssessmentTM can be used as a complement to, rather than a substitute for, existing investment strategies. This allows Innovest and our partners to tailor a wide variety of products to the specific risk/return objectives of our clients: ? ? Our investment management partners to date have included:? ABN-AMRO? Brown Brothers Harriman? IDEAM / Credit Agricole AM ? Glenmede Trust? T. Rowe Price? Dreyfus? ING/Aeltus? ABP Investments? State Street Global AdvisorsInnovest's institutional clients include several of the largest pension funds in the world, including ABP (Netherlands) and CalPERS (U.S.A.). ................
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