ESG social credit scores…currently in corporate environment

LFC Comments: We are becoming increasingly concerned about a social credit score control system that is making it way into the private sector. It is already in the corporate sector as these two article indicate.

Merrill Edge adds ESG scores to client dashboard

Update provides visuals to simplify portfolios analysis and performance review.

Merrill Lynch is making impact investing a centerpiece of Merrill Edge, the firm’s digital investment service tailored to clients with less than $250,000 of investible assets.

An update on Monday refreshes the Merrill Edge user interface and adds environmental, social and governance scores from MSCI. The scores will identify which investments are ESG leaders or laggards, so investors can align their portfolios with their personal values.

The new user experience also simplifies portfolio analysis and performance review with new visualizations showing clients portfolio data, education and insights. The redesign builds on a stock research tool that it launched in November that aimed to help online investors make better decisions about thousands of U.S. equities.

In addition to monitoring personal portfolios, Merrill Edge investors can see how their performance compares to the broader market. The portal breaks down the portfolio’s asset allocation by investment class and industry, showing overlapping items and recommended actions to build a more balanced portfolio.

“Knowledge is power, and we want our self-directed clients to know as much as possible when building and managing their portfolios to help them pursue investing goals,” said Aron Levine, the head of Merrill Edge.

Impact investing is an increasingly popular feature on digital investing platforms. Last week, Personal Capital added socially responsible investment strategies to its digital advice service, and TIAA introduced a robo-adviser in June that provides access to SRI mutual funds and ETFs.


Is ESG investing going mainstream?

Despite advisers’ misgivings, asset managers are coming around to the idea that a company’s stance on environmental, social and governance issues is a good proxy for future success.

It is still easy to find naysayers of investing based on environmental, social and governance factors, but those critics who once held the high ground of quantitative and rational analysis are starting to feel the ground slowly crumble beneath their feet.

“In general, companies with the strongest records on employee relations and environmental sustainability, for example, often have better financial performance over the long run than those with the weakest records,” said Sonia Kowal, president of Zevin Asset Management, a $600 million firm that exclusively builds ESG portfolios. “Given this, why wouldn’t you use this information advantage when looking for investment ideas?”

But today there is a serious reassessment going on in the financial services industry and broader investing community about what ESG ratings can illuminate about a potential investment. Money managers are rapidly expanding research and expertise of ESG factors as tools for analyzing risks and opportunities.




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