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Advanced RI Analysis
Advanced Responsible Investment Analysis is the first advanced course to be released by the PRI Academy. The course explores and examines the use of sustainability data in fundamental investment analysis and stock valuation.
Advanced Responsible Investment Analysis
Advanced RI Analysis provides an in-depth look at the use of sustainability data in fundamental investment analysis and stock valuation. The course helps investment practitioners develop a keen awareness of ESG factors and an understanding of when, where and how non-financial information can be used to add value in the investment decision making process.
Certification
After successful completion of the course, the user will be awarded a certificate of completion.
Learning outcomes
By the end of this course you will be able to:- Identify ESG factors and indicators that will affect financial performance
- Understand how to assess the materiality of ESG factors
- Understand the approaches and options for ESG analysis and integration
- Apply ESG factors into financial models
- Identify the many uses of sustainability data
- Evaluate how a company’s fair value is impacted when adjusted to ESG performance
- Recognise emerging regulations and standards linked to global sustainability goals, and understand their potential impact on business
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Course outline
INTRODUCTION
- Understand the role of intangible value drivers in investment decisions
- Identify the uses of ESG information
- Recognise the focus of ESG integration
ESG INTEGRATION FRAMEWORK
- Learn the PRI’s four-stage ESG integration model
- Identify the relationship between ESG data and ESG analysis techniques
- Understand the basic concepts needed to identify factors with the most material financial impact
STAGE 1: QUALITATIVE ANALYSIS
- Identify ESG factors in sector analysis
- Outline key environmental, social and business indicators that can impact financial value
- Identify global trends and regulations and their impact on financial analysis
- Map ESG factors in hypothetical case studies
- Assess ESG issues using risk mapping methodologies
- Measure the extent to which ESG issues will impact certain financial metrics
STAGE 2: QUANTITATIVE ANALYSIS
- Identify the guiding principles for assessing ESG issues
- Assess the degree to which ESG factors affect industry and company performance
- Evaluate revenue, profit margins and operations using ESG data
- Identify the entry points for ESG analysis in an DCF model
- Understand ESG-related adjustments to WACC and key financial ratios
- Assess and rank companies according to key ESG factors
STAGE 3: INVESTMENT DECISION
- Explain how integrated company analysis influences investment decisions
- Recognise the variety of investment mandates, strategies or fund objectives in which investment decisions are made
- Recognise the varying options of ESG analysis and integration
STAGE 4: ACTIVE OWNERSHIP ASSSESSMENT
- Explain how information and outcomes from engagement impacts investment decisions
- Identify different types of engagement
- Recognise engagement drivers and approaches
CASE STUDY: VALE
- Use external ESG research and company reports to conduct a peer analysis
- Model the impact of ESG issues on revenues, operating costs and cost of capital
- Identify and model the impact of carbon pricing scenarios
- Understand how ESG issues can impact capital expenditure, provisions and contingent liabilities
- Understand the concept of investor time horizons
- Identify priorities for and potential obstacles to engagement
CASE STUDY: UBER
- Use company-provided information to benchmark ESG performance
- Conduct scenario analyses of key ESG issues
- Model the impact of social issues, GHG emissions reporting and city congestion
- Apply sensitivity tests to integrated analysis
- Identify priorities for and potential obstacles to engagement
SOURCING AND USING ESG INFORMATION
- Identify the range of ESG data available
- Understand how to use multiple forms of ESG data
- Understand the role of reporting and recognise the challenges faced in collecting ESG data
- Identify global initiatives, regulations and tools that support ESG integration
If you are an investment manager and would like to enhance your understanding regarding ESG valuation the Advanced RI Analysis course is a good tool to help with that.
Maria Nordqvist
Head of Responsible Investments, Lannebo Fonder, Sweden
This course provides solid tools for a step-by-step ESG analysis and its integration into the investment decision process. The in-depth real case studies are particularly captivating and bridge the gap between theory and practice.
Florian Marini, CFA, CMT
CIO, Bruellan SA, Switzerland
Advanced RI Analysis has been appropriately structured to provide an overview of all relevant aspects of ESG Analysis. The content has helped me structure my thoughts around the construction of the in-house ESG Ratings System for my Company.
Amitavo Basu
Vice President, Transparent Value, India
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