August 19, 2011
Trucost Environmental Data to Reach More Investors
by Robert Kropp
The environmental research provider partners with FactSet to add environmental risk management to
the financial research company's offerings to clients.
In 2010, Trucost provided data for an
important report that
sought to put a price tag on the global cost of environmental degradation.
According to the analysis by Trucost, the estimated cost worldwide of environmental
damage caused by human activity reached $6.6 trillion in 2008, or 11% of the global Gross Domestic
Product (GDP). The loss was 20% larger than the $5.4 trillion loss in the value of pension funds in
developed countries caused by the global financial crisis in 2007 and 2008.
such losses are still externalized by companies to an unacceptable degree, the message to investors
is clear. That sufficient attention to environmental, social, and corporate governance (ESG) issues
can result in outperformance, especially over the long-term horizon adopted by increasing numbers
of institutional investors, has also been demonstrated by many academic reports addressing the
Trucost announced this week that its environmental data will now reach more
investors, as the firm has entered into a partnership with FactSet Research Systems, a US-based provider of financial
information and analytic software for investment professionals. According to a press release, the agreement
"will allow investors to seamlessly embed environmental risk management into their everyday
decision making, alongside traditional financial metrics."
The press release continued,
"The new partnership creates an integrated approach to analyzing the environmental performance and
associated financial risk of all companies across the major investment indices, including carbon,
water, waste, pollution and natural resource dependency."
James Salo, senior vice
president of Trucost, stated, "The current era of natural resource constraints and rising commodity
prices combined with the trend towards national policy on ‘polluter pays’ regulations, make it
increasingly important to enable mainstream investors to manage environmental risk."
addition to risk management, Salo continued, "We have seen outperformance of almost 10 percent
among the top 100 companies (in Newsweek's Green Rankings, to which
Trucost contributes environmental data) versus the S&P500 over the last two years." Newsweek is
scheduled to release its third annual Green Rankings on Oct. 17.
Trucost and FactSet
stated that the California State Teachers'
Retirement System (CalSTRS), the nation's largest public pension fund, already accesses
Trucost's environmental data through FactSet's platform. In May, CalSTRS announced that its
discussions with external managers will include an analysis of how ESG considerations are included
in their investment decision-making strategies.