22 July 2024 – UPDATE
Statement of Application
We have been working with this since our committment to follow the ICMA code of conduct on 22 January 2024 as the first signatory.
Hereunder is a summary of our status, the detailed information is available in our ESG research and ESG rating policy (link below).
Principle on Good Governance
The organisational structure of SustainAX AB is very flat due to the small size of the company, but as the company grows an appropriate governance structure will be put in place. All full time employees are practising ESG risk analysts, but where the team leader also do other tasks required by the activities of the company. Non-full time employees are not involved in the ESG research or in the ESG rating determination.
Principle on Securing Quality (Systems and Controls)
SustainAX is committed to delivering high-quality ESG research and data, adhering to a policy that guides the industry’s “state of the art” standards. The firm relies on publicly disclosed data, with exceptions for non-listed first-time issuers. It emphasizes the importance of transparency in its ESG research and rating methodology, which is detailed on its website but limited for non-subscribers. SustainAX’s ESG products are “point in time,” considering both historical and future risk management factors. The methodology, updated annually based on stakeholder feedback, is strictly followed and respected across all research processes. All historical ESG data is securely stored and backed up. The company ensures technical and personnel capabilities to maintain high-quality research, which undergoes a dual-review process. SustainAX mandates that all analysts are trained in ESG risk research, ensuring professionalism, competency, and integrity in their work. For more detailed information, SustainAX provides online resources outlining their methodology and process updates.
Principle on Conflicts of Interest
SustainAX’s Code of Conduct addresses conflicts of interest, particularly regarding clients’ desires for favorable ESG risk ratings and entities’ access to ESG research. It prohibits corruption and limits gift acceptance from clients and suppliers. In case of conflicts, disclosures are made without naming involved parties. While currently, there are no trading restrictions for staff on ESG-researched entities, this may change to prevent market influence. The absence of variable remuneration reduces the likelihood of guideline breaches, with all team members reporting to a single leader.
Principle on Transparency
SustainAX maintains a policy of not publishing ESG risk ratings, as these are for exclusive for clients. Instead, it offers an ESG risk library and outlines its ESG risk research process, which forms the basis for its ratings and data. The company publishes indications of ESG risk ranges and weights for environmental (E), social (S), and governance (G) risk factors. Detailed criteria, KPIs, and weights are not disclosed publicly but are available to clients in research reports. SustainAX’s ESG research spans the business scope of entities, including value chain risks and minority stakes, and focuses on both historical performance and forward-looking risk mitigation efforts. The methodology is statistically validated to ensure consistent calibration over time. For a comprehensive understanding, SustainAX’s home page and methodology descriptions offer further insights into their ESG risk assessment process.
Principle of Confidentiality (System and Controls)
SustainAX only work with public information, so this point is not relevant.
Principle On Engagement
SustainAX only work with public information, so this point is not relevant.
Our ESG research and ESG rating policy can be found here. It is taliored to ensure we are aligned to and to answer in detail the relevant points of the ICMA code of conduct.
New web pages with transparency for our methodology can be found here:
More about our ESG research and ESG rating can be found here.
If you have any questions, do not hesitate to contact us at sustainAX.
22 January 2024 – INITIATION
sustainAX signs up for the ICMA Code of Conduct for ESG Ratings and Data Product Providers
After thorough review we have taken the decision to sign up today 22 January 2024 for the ICMA Code of Conduct for ESG Ratings and Data Product Providers. ICMA is the International Capital Market Association.
About the ICMA Code of Conduct for ESG Ratings and Data Product Providers
“This Code of Conduct has been created by an industry-led working group and was launched on 14 December 2023. It is grounded in the recommendations published by the International Organization of Securities Commissions (IOSCO), with a focus on promoting transparency, good governance, management of conflicts of interest, and robust systems and controls. As such, it is intended to be internationally interoperable and could be used by jurisdictions where no local Code or regulation is in place.”
The principles:
1. Principle on Good Governance
2. Principle on Securing Quality
3. Principle on Conflicts of Interest
4. Principle on Transparency
5. Principle on Confidentiality
6. Principle on Engagement
EU regulation of ESG Rating Providers
The EU has started the process of regulation of the ESG Rating providers, but it will take some time before this is in force. We see that many aspects of the ICMA Code of Conduct for ESG Ratings and Data Product Providers are aligned with the content of the current proposal for EU regulation and we see that starting the process to align with the Code of Conduct will to a large extent prepare us for the upcoming regulation process with ESMA.
What do we at sustainAX have to do now?
At the latest on 22 July 2024, that is the end of the implementation period, we will publish a statement of how we have applied the Code (“Statement of Application”) on this website and notify ICMA about this.
In the period between now and then we will further develop our existing policy framework, processes and governance to ensure compliance with the Code of Conduct.
