July 07, 2005
Vigeo-Ethibel Merger Forms New European Socially Responsible Investment Research Firm
by William Baue
The Vigeo Group becomes the largest corporate social responsibility rating agency in Europe, with
global operations that the newly-created company plans to expand.
Socially responsible investment (SRI) research analysts are often faced with the challenge of
assessing the effects of a corporate merger on the social and environmental performance of the
resulting company. What is the effect on corporate social responsibility (CSR) analysis and rating
when SRI research firms merge? This is the implicit question posed by the recent merger between
France-based Vigeo and Belgium-based Ethibel to create the Vigeo Group.
Numbers provide one set of answers.
"The merger between Vigeo and Ethibel gives
birth to Europe's largest corporate social responsibility rating agency," said Vigeo Group
spokesperson Thomas Gerard. "The Vigeo Group staff encompasses 56 people, including 25 CSR
"Total sales in 2004 for Vigeo and Ethibel together represented €4.04
million, making the combined company the leader in Europe," Mr. Gerard told SocialFunds.com.
Investors (including BNP
Paribas Asset Management and
HSBC Investments) represent Vigeo Group's primary clients, with combined 2004 sales to them
amounting to €2.77 million (€1.62 from Vigeo, €1.15 from Ethibel). The Vigeo Group
thus accounts for 18 percent of the estimated €15 million European SRI research market,
according to Mr. Gerard.
"The market of investors is expecting more and more
professionalism from the rating agencies," said Mr. Gerard. "The agencies should prove their
capacity to develop innovative processes, to cover more stock values."
"This is the reason
why we foresee the beginning of an international consolidation of this sector, the creation of
Group Vigeo being one example," he added. "The Vigeo Group's objective is to consolidate its
leading position in Europe but also to acquire an international dimension."
Group retains Ethibel's Pacific Project of two Japan-based analysts specifically dedicated to Asian
markets, and Vigeo brings coverage of the Moroccan market to the table.
The Vigeo Group's
primary product for investors is its "Equitics" rating, which assesses corporate social and
environmental sustainability performance on 550 listed companies in Europe. The Equitics process
reviews six domains (such as human rights, environment, and corporate governance) under 38
criteria, examining 298 specific indicators.
Companies also represent a market for the
Vigeo Group. The Vigeo Group offers what it calls "Overnance" ratings to companies, in which
analysts conduct six-months of research to identify strengths and opportunities as well as
vulnerabilities and risks. Whereas Equitics ratings measure CSR performance at the corporate
level, Overnance ratings rarely measure corporate-wide CSR performance.
"Overnance is a
genuine CSR audit--companies solicit the ratings, therefore they select the area, territory, and
dimension to be assessed," explained Mr. Gerard. "For example, one company may ask for a CSR audit
on its metallurgy activities in Poland, specifically focusing on human resources and human rights
Overnance ratings belong to the company, so they cannot be sold to investors.
Moreover, investors typically require comprehensive CSR evaluations, so the narrow focalisation of
Overnance ratings renders them moot for investment decision-making, he pointed out.
its 2002 inception, Vigeo (which is Latin for "vigilance" or "watchtower") has conducted 33
Overnance assignments, with sales growing from €234,000 in 2003 to over €1million in
In addition to the Equitics and Overnance ratings, the Vigeo Group provides
investors and companies Ethibel's Sustainability Indexes (ESI) and Vigeo's Advanced Sustainable
Performance Indexes (ASPI)
for benchmarking corporate financial and sustainability performance. Ethibel also brings to the
Vigeo Group its European
Quality Label, which provides an imprimatur validating funds' claims of social responsibility.
One final distinguishing factor of the Vigeo Group is its ownership structure, with
nongovernmental organizations (NGOs) and unions controlling a stake amounting to more than a fifth
(21 percent) of the company. Investment firms own almost a half (49 percent) of the company, while
businesses' capital investment stands at just under a third (30 percent).
(€13 million) and Ethibel's existing profitability (from revenues of €1.3 million in
2004, up 12 percent from 2003) give the Vigeo Group long term sustainability and independence,"
concluded Mr. Gerard.