Calvert’s research strives to create a holistic view by identifying which specific Environmental, Social and Governance (ESG) factors are most relevant (i.e. financially material) within a given subindustry. This process then enables us to identify the key aspects of the business most likely to affect financial outcomes, ultimately guiding our investment decisions and corporate engagement efforts.

Background Alt

A sophisticated focus


Our nuanced approach to materiality-based analytics takes into account the fact that different ESG factors have more or less impact from one industry to another. So, our process begins by refining established industry classifications into custom peer groups based on common ESG risks, which allows us to make more relevant comparisons, ultimately leading to better investment decisions.

Material Weighting


Consumer Finance

  • Privacy and Data Security
  • Product Quality and Safety
  • Overall Governance Score
  • Human Capital Development
  • Board Structure and Gender Diversity
  • Workplace Diversity
  • Workplace Safety
  • Carbon/GHG Emissions
  • Energy Management
  • Product Lifecycle
  • Toxic Emissions
  • Corruption and Supply Chain Management

Industrial Machinery

  • Energy Management
  • Product Quality and Safety
  • Workplace Safety
  • Overall Governance Score
  • Product Lifecycle
  • Human Capital Development
  • Board Structure and Gender Diversity
  • Toxic Emissions
  • Corruption and Supply Chain Management
  • Workplace Diversity
  • Carbon/GHG Emissions
  • Privacy and Data Security

Application Software

  • Human Capital Development
  • Privacy and Data Security
  • Overall Governance Score
  • Workplace Diversity
  • Board Structure and Gender Diversity
  • Energy Management
  • Product Quality and Safety
  • Workplace Safety
  • Product Lifecycle
  • Toxic Emissions
  • Corruption and Supply Chain Management
  • Carbon/GHG Emissions

Materiality Weighting by Size:


Low

Medium

High

Select Issues

Environmental
Social
Governance

Chart is for illustrative purposes only. Select issues do not include all material issues for listed peer groups. Calvert’s research focuses on materiality and evaluates ESG criteria on both an industry and company basis across a broad universe.

Our Differentiated 5-Step Process


Step Description
1
Define Peer Group
Refine established classifications into custom peer groups based on shared, financially material ESG risks.
2
Develop Investment Thesis
Develop investment thesis to identify current and emerging ESG risks and opportunities over our investment horizon.
3
Build Structural Model
Measure performance on financially material ESG issues using select key performance indicators (KPIs).
4
Rate and Rank Issuer
Calculate Overall ESG Score for each issuer based on analysis of three material exposures: Company-Level, Industry-Level and Execution-Level.
5
Validate Recommendations
Review investment theses; approve peer group models and final decisions on issuers; oversee and prioritize company engagement efforts.

For cases when insufficient data exists to calculate an ESG score, Calvert's ESG analysts evaluate issuers on the same set of financially material ESG issuers using a more qualitative approach. Instead of receiving a numerical score, a qualitative assessment is written in the form of a research note.