ESG rating bias and the key role played by internal bottom-up ESG analysis

European Small Cap Equity

We’re regularly baffled by the ESG scores for companies we know are committed to a sustainable future

We are often vocal about the shortcomings of ESG ratings. This frustration is particularly acute for our European Small Cap Equity team who invest in companies that often do not have any coverage from ESG agencies. For those that are rated, the grades rarely reflect what we understand of the company through our bottom-up analysis and regular company interaction. We’re regularly baffled by the ESG scores for companies we know are committed to a sustainable future.

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Business Continuity at QUAERO CAPITAL

Portfolio management and client service to our clients

Dear Clients,

In these challenging times, we maintain the view we expressed last week (please see here). Basically, the news flow from this pandemic continues to deteriorate and the extraordinary measures taken by governments are likely to create much uncertainties and volatility in the short term anyway. Whereas it remains extremely difficult to make any meaningful forecasts, it seems to be a very violent but time limited shock to the world economy. Our conviction is therefore that fundamentals will be the determining aspect of the recovery. This should be a positive for active management and reinforces the relevance of our boutique “away from the crowds” investment model.

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Current Market Views

Investment Update

We would like to keep you up to date with our thinking in this period of extreme volatility and give you a quick update on our funds at QUAERO CAPITAL. In the fog of war, it is extremely hazardous to make any prediction and invariably, these tend to be highly contextual or misguided in a shock such as the one we have experienced this quarter.

We can however make a number of observations that we hope will be useful to our clients.

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Palm Oil

The spotlight in recent weeks has shifted back upon the palm oil industry. The negative connotations associated with the sector have continued to deepen, but there is a growing number of producers who offer a differentiated product, one made with a focus on sustainability. Worldwide, demand for the commodity has continued to rise which brings nations and climate activists to a crossroad, wondering whether sustainable palm oil can be produced whilst fighting climate change.

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