Refinitiv Puts ESG and Fund Rating Units Under One Executive

Market data giant Refinitiv, having already endorsed United Nations Sustainable Development Goals and established “the link between sustainability and financial performance” as a pillar of business strategy, has placed veteran executive Leon Saunders Calvert in a key, newly created leadership position.

Formerly head of the M&A and capital raising segment of Refinitiv and predecessor firm Thomson Reuters Financial & Risk, Saunders Calvert has been named head of sustainable investing and fund ratings. Refinitiv's Environmental, Social and Governance (ESG) Sustainable Investing and Lipper Fund Ratings businesses both report to him “to increase focus on unearthing links between sustainable business strategies and financial performance,” according to a March 12 press release.

“We haven't come up with the final methodology linking fund performance and sustainability,” Saunders Calvert said in a subsequent interview. “We are driving towards it and engaging institutional investors in the market to understand their needs, which is going to inform that.”

Historical Databases

Refinitiv is building on a long-established ESG data business: It has sustainability data covering more than 7,000 companies with 17-plus years of history across 400 metrics. The Lipper database has holdings details on more than 380,000 mutual funds globally, with over 40 years of history.

“The ability to combine those things positions us very well to deliver ESG metrics and analytics capabilities through the existing channels, which are already so central to the institutional community,” Saunders Calvert said.

Elena Philipova, head of ESG, and Robert Jenkins, head of Lipper, are reporting to Saunders Calvert.

“We believe that creating a strong link between our ESG and Lipper data will be hugely beneficial to the financial industry as sustainability becomes a key and fundamental metric,” said Pradeep Menon, managing director of Investing & Advisory. “Leon's experience running our large capital markets and investment banking franchises will help us really push boundaries in this incredibly important area.”

“Operational Imperative”

Refinitiv chief executive officer David Craig, who has been both professionally and personally vocal on climate change and other ESG-related issues, said that the company is well positioned to support the sustainability-data transparency that investors are demanding.

“We are at an inflection point where the need for corporate disclosure around ESG and sustainability is no longer in question,” Craig said. He called it “an operational imperative that benefits not only the corporation, but also the wider investment community and our global society at large.”

Saunders Calvert said Refinitiv's offerings could help investors identify companies that are outperforming financially, economically and in productivity, while simultaneously reducing their carbon footprint and emissions. “If they can do both of those things at the same time, then that really is sustainability, and there's likely to be a lot more allocation towards those companies,” he said.

He added that “there are now non-financial measures of company performance that also need to go into the same rigorous process of understanding how companies perform and how they're expected to perform.”

Mutual Fund Scores

In addition to increasing the universe of corporates covered in its ESG database, Refinitiv has plans to initiate ESG scores on mutual funds.

“The market wants more than just an average ESG score,” Saunders Calvert said. “It wants to know what the time series of those data points are, and whether it's trending in the right direction.”

The executive has been in the financial markets his entire career, particularly focused on data, analytics and insight. Before joining what is now Refinitiv, in 2007, he ran the research and data teams at M&A-data company Mergermarket. He started out as an analyst at advisory boutique Regent Partners.

He has written blog posts on such subjects as digital transformation and blockchain in capital markets, and artificial intelligence in investment banking.

“The links between financial performance, risk and ESG are becoming more evident,” Saunders Calvert said when his appointment was announced. “It is with great excitement that I can help drive further analytics and value to our customers who increasingly need insight into the importance of ESG and its relationship to fund performance metrics.”

In the interview, he added, “I have a strong sense about what a customer's needs are, the changes in the customer's needs over time, how to adapt to those changes and drive insight around what's happening in the market.”