Finding competitive advantage in a changing world

When operating context changes, so does competitive advantage. The foresight to recognize such shifts and the agility to adapt proactively is essential to modern management.

We keep clients a step ahead of emerging opportunities and risks by continually sharpening our understanding of factors that can be demonstrated to create sustainable business value.

Our extensive analysis of market data and hundreds of publicly traded corporations has uncovered clear correlations between financial performance and issues whose significance is often overlooked or considered intangible.

Ultimately, this work has led us to question whether “non-financial issues” exist. In fact, we have identified more than two-dozen environmental, social, governance (ESG) and related economic factors that enhance value and alpha for companies that actively engage the changing landscape of modern business.

Just one example of the impact of “intangibles”: A Stoxx Europe 600 portfolio reweighted to reflect the level of gender parity on the board of directors outperforms the base index and an equal-weighted version of the index in total and risk-adjusted return.

A unique, pragmatic methodology
In studying specific value drivers, we test their effect against trusted indices, rather than simply cherry-picking individual companies to analyze. Our approach reviews and scores every company in the index on their adoption of one or more specific behaviors, and backtests a model portfolio that emphasizes sophisticated weighting, not negative screening.

The impacts we evaluate are not limited to stock price appreciation. We have also observed positive correlations between ESG factors and financial parameters such as ROE, ROA, WACC, and Debt to Equity, among others.

How it creates value for you
Today’s early-mover opportunity often becomes tomorrow’s industry norm. And costly risks are easy to see in hindsight, but can be hard to appreciate in advance—especially when they’re buried in the foundational assumptions of a long-standing business model.

If you’re a corporate officer, our data sets and analysis capabilities enable you to better identify, implement, and communicate activities that deliver real value. And if you’re an investment professional, our insights can help you identify new sources of alpha and differentiate your offerings.

Learn more about our financial correlations work