Alpha-Centric ESG Research

Kyle Rudden

<ul>
<li>The Monetary Authority of Singapore (MAS) recently launched a public consultation regarding a Code of Conduct for ESG ratings providers and ESG data product providers in Singapore.</li>
<li>It is the right approach for Singapore – a voluntary best-practices framework furthering one of the world's most credible "green" economies, not a regulatory force-fix of something broken.</li>
<li>No surprise ratings methodology changes. No en masse upgrades/downgrades. No acute shocks to the system. Just slow and steady progress for ESG investing and finance in Singapore.</li>
</ul>


The Monetary Authority of Singapore (MAS) recently launched a public consultation regarding a Code of Conduct for ESG ratings providers and ESG data product providers in Singapore.
It is the right approach for Singapore – a voluntary best-practices framework furthering one of the world's most credible "green" economies, not a regulatory force-fix of something broken.
No surprise ratings methodology changes. No en masse upgrades/downgrades. No acute shocks to the system. Just slow and steady progress for ESG investing and finance in Singapore.


Singapore Code of Conduct for ESG Ratings Is Less Risk and More Reward

<ul>
<li>Despite the rough market for ESG-related indexed funds recently, <a href="https://www.smartkarma.com/entities/msci-inc" target="_blank" data-smartkarma-citation="entities:17865:1" rel="noopener">MSCI (MSCI US)</a> continues to increase its market share and solidify its already dominant position as the top indexer.</li>
<li>MSCI ESG-related indexes currently have a 67% (and still growing) market share of the overall ESG indexing ecosystem with nearly US$250 billion in index-linked ETF assets globally.</li>
<li>MSCI's dominant market position is even stronger in important ESG niches/verticals, and two in particular: 1) climate change-focused indexes, and 2) Asia-Pacific ESG markets.</li>
</ul>


Despite the rough market for ESG-related indexed funds recently, MSCI (MSCI US) continues to increase its market share and solidify its already dominant position as the top indexer.
MSCI ESG-related indexes currently have a 67% (and still growing) market share of the overall ESG indexing ecosystem with nearly US$250 billion in index-linked ETF assets globally.
MSCI's dominant market position is even stronger in important ESG niches/verticals, and two in particular: 1) climate change-focused indexes, and 2) Asia-Pacific ESG markets.


MSCI ESG Indexes Gaining in Market Share Despite ESG's Recent "Bear Market"

<ul>
<li>
<a href="https://www.smartkarma.com/entities/singapore-exchange-ltd" target="_blank" data-smartkarma-citation="entities:1047:1" rel="noopener">Singapore Exchange (SGX SP)</a> and <a href="https://www.smartkarma.com/entities/oversea-chinese-banking-corp" target="_blank" data-smartkarma-citation="entities:114:1" rel="noopener">OCBC (OCBC SP)</a> recently launched a new sustainability/ESG index – the <a href="https://www.smartkarma.com/entities/iedge-ocbc-singapore-low-carbon-select-50-capped-index" target="_blank" data-smartkarma-citation="entities:35795:1" rel="noopener">IEdge-OCBC Singapore Low Carbon Select 50 Capped Index (SGLC50CN INDEX)</a>.</li>
<li>Whilst country-Specific carbon indices are often too narrow for index-linked products, they are invaluable as carbon performance benchmarks for climate change mitigation and planning.</li>
<li>The iEdge-OCBC index, along with the broad-based <a href="https://www.smartkarma.com/entities/iedge-singapore-low-carbon-index" target="_blank" data-smartkarma-citation="entities:35793:1" rel="noopener">iEdge Singapore Low Carbon Index (SGLCN INDEX)</a>, consistently outperformed (backcast) comparable indices, often with lower volatility.</li>
</ul>



Singapore Exchange (SGX SP) and OCBC (OCBC SP) recently launched a new sustainability/ESG index – the IEdge-OCBC Singapore Low Carbon Select 50 Capped Index (SGLC50CN INDEX).
Whilst country-Specific carbon indices are often too narrow for index-linked products, they are invaluable as carbon performance benchmarks for climate change mitigation and planning.
The iEdge-OCBC index, along with the broad-based iEdge Singapore Low Carbon Index (SGLCN INDEX), consistently outperformed (backcast) comparable indices, often with lower volatility.


SGX's New Low Carbon Index Outperformed Comparable Indices and With Less Volatility

<ul>
<li>In a recent Insight, <a href="https://www.smartkarma.com/insights/regulating-esg-ratings-in-india-outline-of-sebi-s-proposed-regulatory-framework" target="_blank" data-smartkarma-citation="insights:64468" rel="noopener">Regulating ESG Ratings in India: Outline of SEBI's Proposed Regulatory Framework</a>, I summarised SEBI's proposed regulatory framework for ESG ratings in India. </li>
<li>This Insight goes a bit further, looking at implications of regulation on stocks of ESG ratings providers (ERPs), especially Credit Rating Agencies (CRAs) and Research Analysts (RAs).</li>
<li>Downside risk are minimal for ERPs, but a few scenarios and stipulations related to conflicts of interest and compensation (how ERPs are paid, and by whom) could have an impact.</li>
</ul>


In a recent Insight, Regulating ESG Ratings in India: Outline of SEBI's Proposed Regulatory Framework, I summarised SEBI's proposed regulatory framework for ESG ratings in India. 
This Insight goes a bit further, looking at implications of regulation on stocks of ESG ratings providers (ERPs), especially Credit Rating Agencies (CRAs) and Research Analysts (RAs).
Downside risk are minimal for ERPs, but a few scenarios and stipulations related to conflicts of interest and compensation (how ERPs are paid, and by whom) could have an impact.


Credit Rating Agency Stocks Most Impacted by SEBI Regulation of ESG Ratings in India

<ul>
<li>Hang Seng Indexes launched two new sustainability/ESG indexes, the HSI ESG Screened Index and the HSI Low Carbon Index. Hang Seng is doing a good thing; advancing ESG in Asia.</li>
<li>Both are based on the Hang Seng Index. HSI ESG Screened Index is essentially ESG factor-tilted with a minor exclusionary screen. Straightforward, and with top ESG ratings firms behind it.</li>
<li>I do, however, have a few thoughts about the HSI Low Carbon Index. Call them observations, or experienced-based opinions, or similar. Food for thought kind of stuff, nothing critical.  </li>
</ul>


Hang Seng Indexes launched two new sustainability/ESG indexes, the HSI ESG Screened Index and the HSI Low Carbon Index. Hang Seng is doing a good thing; advancing ESG in Asia.
Both are based on the Hang Seng Index. HSI ESG Screened Index is essentially ESG factor-tilted with a minor exclusionary screen. Straightforward, and with top ESG ratings firms behind it.
I do, however, have a few thoughts about the HSI Low Carbon Index. Call them observations, or experienced-based opinions, or similar. Food for thought kind of stuff, nothing critical.  


Hang Seng's New ESG-Themed Indexes Will Help Promote ESG in Asia (Some Thoughts On the Carbon Index)

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Singapore Code of Conduct for ESG Ratings Is Less Risk and More Reward

Singapore's Code of Conduct for ESG ratings is more light-handed than other regulation-based approaches, but therein lies the "less risk and more...

Kyle Rudden

SGX's New Low Carbon Index Outperformed Comparable Indices and With Less Volatility

SGX's new iEdge-OCBC Low Carbon index outperforms comparable indices, and with lower volatility – a testament to Singapore issuers' carbon...

Kyle Rudden

Credit Rating Agency Stocks Most Impacted by SEBI Regulation of ESG Ratings in India

The potential impacts of SEBI's proposed framework for regulating ESG ratings are unclear at this stage, but a few things (related to conflicts of...

Kyle Rudden

Hang Seng's New ESG-Themed Indexes Will Help Promote ESG in Asia (Some Thoughts On the Carbon Index)

Hang Seng Indexes launched two new sustainability/ESG indexes, the HSI ESG Screened Index and HSI Low Carbon Index. Here is a quick look, and a few...

Kyle Rudden

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

Singapore Code of Conduct for ESG Ratings Is Less Risk and More Reward

Singapore's Code of Conduct for ESG ratings is more light-handed than other regulation-based approaches, but therein lies the "less risk and more...

Kyle Rudden

MSCI ESG Indexes Gaining in Market Share Despite ESG's Recent "Bear Market"

It's been rough for ESG index funds and the ESG indexers that index them. Not for MSCI, though. MSCI continues to gain market share and solidify...

Kyle Rudden

SGX's New Low Carbon Index Outperformed Comparable Indices and With Less Volatility

SGX's new iEdge-OCBC Low Carbon index outperforms comparable indices, and with lower volatility – a testament to Singapore issuers' carbon...

Kyle Rudden

Credit Rating Agency Stocks Most Impacted by SEBI Regulation of ESG Ratings in India

The potential impacts of SEBI's proposed framework for regulating ESG ratings are unclear at this stage, but a few things (related to conflicts of...

Kyle Rudden

Hang Seng's New ESG-Themed Indexes Will Help Promote ESG in Asia (Some Thoughts On the Carbon Index)

Hang Seng Indexes launched two new sustainability/ESG indexes, the HSI ESG Screened Index and HSI Low Carbon Index. Here is a quick look, and a few...

Kyle Rudden