Schoellerbank works with ECPI in the area of ethical investing. ECPI was founded in 1997 and is one of the most prominent rating agencies for ethical investing. Here is a brief description of how ECPI works:
- ECPI has created an extensive checklist over the years to identify if a company works ethically or not. The number of questions to be answered is 150.
- To find the answers to the questions, the sustainability reports, media reports and annual reports of the companies are scrutinized. Likewise, the written explanations of employee councils and trade unions are also analyzed.
- The questions are categorized into three groups (environmental, social and governance = ESG) and depending on their significance, they are weighted differently. For example, minor deviations can be offset by a greater engagement in another area. All three ESG categories are evaluated and compared with other companies from the same industry. -> Keyword: best-in-class approach.
Best-in-class Approach -> The Procedure of ECPI
In a first stage, a so-called “negative screening” is conducted. In this context, companies are categorically excluded that do business in controversial areas such as armaments, tobacco, alcohol, gambling, nuclear energy, pornography, GMO food production and also in contraceptives.
In a second stage, the securities that survived the screening of the first stage are subjected to a “positive screening” with respect to their social and environmental standards; only companies that achieve exemplary results are selected to this category.
In the third and last stage, companies from generally problematic sectors such as the petroleum industry are analyzed but which are outstanding on account of their extraordinary positive engagement and activities (such as large investments in alternative energy sources).