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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.

Even though 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 subject.

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."

In 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.

 

 
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