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After years of widespread improvements, the ESG scores of euro area countries have started to show a more mixed picture. This can be concluded from the latest update of the RobecoSAM Country Sustainability Ranking. The information obtained from the ranking is used in investment decisions for the Euro Government Bonds fund.
There is a clear relationship between the strength of a country’s ESG profile and its creditworthiness. From this perspective, it’s interesting to see that according to RobecoSAM, Ireland has caught up with Germany with regard to sustainability measures. The asset manager evaluates 60 countries in its yearly sustainability framework on a range of 17 environmental, social and governance factors. The April 2015 update of this ranking shows some interesting trends.
Institutional investors are becoming increasingly aware of the fact that trends such as population growth, the scarcity of raw materials and globalization have an impact on a company's risks and opportunities. Under the pressure of regulators and investors, such as participants in pension funds, sustainable investing is slowly but surely evolving from a 'niche' to a general trend.
The ESG ranking of a number of euro periphery countries has improved, after having reached a low in 2010. These changes give information on developments in a country’s investment risk. We use this information to identify trends in, for instance, the political climate that are relevant for our investment decisions.
The Country Sustainability Ranking is the start of the analysis of a country and aims to lead to a better founded investment decision. That is how why we identify opportunities and threats in investment portfolios.
The financial crisis that erupted in 2008 underlined the need to look beyond credit ratings and the classic set of fundamental data and prompted us to develop an analysis process for sustainability on a country level.