GLOBAL - Social issues, such as human capital, workplace, labour and stakeholder related issues, as well as the banking and insurance sector are still under-researched, according to the Enhanced Analytics Initiative (EAI).
This is one of the results of the initiative's seventh evaluation since its launch in 2004, albeit the EAI acknowledges extra financial issues (EFIs) now receive broader and more sophisticated coverage, in particular environmental issues.
Corporate governance coverage is also improving, according to the initiative.
But it admits despite improvements, a better integration of EFI analysis when forecasting financials and calculating the fair value of companies remains a challenge.
This latest evaluation also notes analysts are increasingly venturing into under-researched sectors and regions and into challenging EFIs, such as corporate governance research applied to emerging markets or research, on the physical impacts of climate change on a range of sectors.
It also reports there is a greater willingness to cover long-term horizons and deal with related uncertainties. The EAI hopes in the future uncertainties will be assessed more systematically by means of sensitivity, scenario or other types of analyses.
The body is also calling for more coverage of EFIs related to mergers and acquisitions.
The member initiative, which now collectively owns or manages €2.1trn of assets, evaluated the following institutions as best research providers of extra-financial issues between May and October 2007 from a total of 26:
These seven will be financially rewarded as the half-yearly evaluation serves as the basis for EAI members' allocation of a minimum of 5% of their respective brokerage commissions or research budgets for the coming six months.
The initiative also recognised the performance of Goldman Sachs and Société Générale, both of which scored highly in the evaluation.
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