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"We use SDI AOP data for our sustainable investments at Redwheel because it aligns with our own core beliefs in transparency, rigour and speaking a common language for sustainable investing with asset owners"

Stephanie Kelly, Head of Greenwheel
the sustainable thematic research team of Redwheel

Redwheel use case

   
We have asked Stephanie Kelly, Head of Greenwheel the sustainable thematic research team of Redwheel why the data of the Sustainable Development Investment - Asset Owner Platform (SDI AOP) is important to the organization and how they are using the data.

What has prompted you to acquire and employ the data for a specific use? 
Ahead of the launch of our sustainable funds range in 2023, we recognized the importance of credibly and transparently building a system to be able to identify sustainable investment opportunities. To do this, we needed a data provider that could clearly and transparently provide data as an initial input to fund managers’ assessments of the extent to which investee companies are positively contributing to environmental and social outcomes. 

How does the SDI AOP data differ from other sources out there?
SDG-aligned data provision is still a relatively nascent industry so there was not a very wide range of competitors in the space. However, we found that SDI AOP data had a range of advantages over other available providers:

  1. It has a well-documented and transparent methodology with strong company coverage.
  2. We appreciated that it was backed by asset owners and takes an explicitly investment-focused approach. We wanted to speak a common language with asset owners regarding investee companies’ contributions, so the SDI AOP having that asset owner perspective was key.  
  3. SDI AOP provides both positive impact data and negative impacts that align with sustainable investment requirements to ‘do no significant harm’. SDI AOP does not provide net scores for impact, which we view as an advantage because net scores can be misleading/problematic in a sustainable investing context.
  4. Universe coverage across both emerging markets and global reference indices was very high, meeting the needs of our investment teams.
  5. The data is well structured, user friendly and we were able to integrate it into the platform we use (NT EDS) to surface third party ESG data to fund managers, sustainability professionals and compliance colleagues.

What are the most relevant portions of the dataset to your organization?
We primarily use the positive and negative SDI revenue alignment data as a starting point for assessing a company’s positive impact through products and services.

Which teams in the organization use the data. Is it primarily RI, Portfolio Managers or Strategists using the data? 
Portfolio managers running sustainable funds primarily use the data for identifying companies that could be considered a sustainable investment. Sustainability professionals use it in the context of discussion of holdings with investment teams and in the governance of our sustainable funds. Compliance colleagues use the data to monitor commitments to sustainable investments in sustainable funds. 

How is the data being exploited and what are the results hereof (the more specific the better!) Is the data integrated in your systems? Which specific systems come to mind?
SDI data is at the heart of our approach to sustainable investing at Redwheel. This means fund managers use it to identify the positive (and negative) impacts of stocks; our sustainability professionals use it in debating and discussing stocks with investment teams; and it is integrated into our ESG data interface, compliance and trading systems for monitoring and governing sustainable funds.

To whom do you report about the SDIs and how? 
We have yet to begin reporting on our sustainable funds as they only recently launched but our reports to clients will draw on SDI data as evidence of portfolio alignment to SDGs and sustainable investment commitments. 

What are your objectives with SDI (e.g. applications to measure certain contributions, setting targets around SDI volumes or structure portfolios)
Our objectives are to use the data to identify companies that we consider sustainable investments. For our existing sustainable funds, we have set a threshold of 35% revenues aligned positively to SDGs with no more than 10% of revenues negatively aligned to SDGs. The data is an important first hurdle for a company to qualify as a sustainable investment in our investment process and compliance systems.