Sustainable Investment and Corporate Governance Working Papers, Sustainable Investment Research Platform
No 2010/4:
Analysing the Environmental Content of Financial Analyst Reports by developing an ESG Framework that incorporates Business Opportunities and the Product Perspectives
Pontus Cerin ()
Abstract: Unlike most previous research that merely looks at the
perceptions of analysts, this report examines the environmental information
financial analysts actually use in their analyst reports. Out of almost
4,500 analyst reports about 36 percent contain environmental information,
varying between 3 to 79 percent depending on industry sector where, in
general, analyst reports in sectors with more severe environmental aspects
to a larger degree contain environmental information. The type of
environmental information that the analysts foremost focus on in their
reports are on how firms’ products and product portfolios are adopted to
Environmental regulations facing customers/markets, Customer demands and
Eco-Efficiency. This product perspective is strongly related to discussions
of business opportunities of the firm. In fact, a good 77 % of the
financial analyst reports containing environmental information dealt with
opportunities linked to environmental aspects. To a lower extent, financial
analysts write about company specific risk issues like emissions and
litigation. The financial analyst reports, furthermore, practically lacks
environmental preparedness aspects – like environmental strategies,
policies, management systems, reporting and auditing – that are core issues
of the ethical and SRI analyses. The financial analysts, hence, focus on
different environmental aspects than the ethically specialised analysts.
For analysing the environmental content in the analyst reports in this
study an ESG framework was developed that, unlike previous research, also
detects the environmental performance in the product dimension.
Keywords: Financial Analyst Reports; ESG Framework; Environmental Information; Responsible Investments; Business Opportunities; Product Perspectives; (follow links to similar papers)
47 pages, April 30, 2010
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