How 'green' is currently anything but black and white 

If we want to safeguard our future, we have to make sustainability our top priority. We all agree on that. But what exactly is 'sustainability'? The answers are often not black and white. Electric cars, for example, produce no emissions of harmful CO2. Yet they are not climate-neutral. A lot of CO2 is emitted during the battery production process, and the electricity we use to charge those batteries is not always emission-free, either. So how 'clean' is this electric car really?  

Moreover, the concept of sustainability evolves over time. Today’s young
generation, for example, are going a step further, and are more likely to
choose a shared electric car rather than owning one.  

You can’t argue about tastes and colours. But you certainly can about sustainability. The financial industry tries to capture the concept of sustainability using an array of sustainability indicators: 'environmental', 'social' and 'governance' factors, also known as ESG factors. ESG rating companies sometimes come up with different scores for the same company, reflecting the lack of a uniform definition. 'So are the companies in my responsible investment funds chosen purely at random?’, I hear you ask. No, of course not. At KBC, we believe it is important to be transparent about how we operate.  It’s up to you, the investor, to decide whether our approach is to your taste. 

You can’t argue about tastes and colours. But you certainly can about sustainability. At KBC, we like to be transparent about how we operate. It’s up to you, the investor, to decide whether our approach is to your taste.

Qualitative data and reliable data analysis 

Our entire screening methodology is based on data. A thorough analysis of qualitative data determines whether or not companies and countries make the cut. Objective data analysis also allows for well-founded and justifiable decisions.  

Data and data analysis may seem obvious, but in practice they are anything but. There are no fewer than 40 000 listed companies worldwide. Add to that the exponential increase in data in our digital society, and you begin to understand the challenges we face. Which data is reliable and relevant? How do we get that data? How do we keep it up to date? How can we process the mass of data quickly and efficiently? How do we avoid unintended bias in our data analysis? And so on. As you can see, it takes a lot of expertise to do this job. KBC sources that expertise from professional data providers specialising in the sustainability assessment of listed companies.     

Qualitative data and objective data analysis, constantly updated to reflect new norms and standards, provide a professional underpinning for our decisions.

Carolien Bodewes - Responsible Investing Expert at KBC Asset Management

Choosing a professional data provider 

Data providers such as Morningstar Sustainalytics, MSCI, S&P Global and Refinitiv are not currently subject to official audit. They therefore act as referees in a world of sustainable and responsible investment which attracts more billions in investment every year, while the playing field remains a grey area with no uniform rules. The fact that data providers are not supervised anywhere could raise questions about their independence.  

As long as there is no global standard for reporting sustainability performance, the choice an asset manager makes for a specific data provider is crucial. KBC Asset Management made a judicious choice for Morningstar Sustainalytics as its main data provider, after weighing up all the pros and cons. We scrutinise a range of data providers at regular intervals, in collaboration with the Responsible Investing Advisory Board, an independent board of academics. Among other things, we analyse the services provided, scope, frequency of updates and quality of reports, with transparency regarding the sources used a crucial aspect. The Responsible Investing Advisory Board also consistently scrutinises a selection of companies for quality control purposes. 

Morningstar Sustainalytics provides us with the necessary data and data analysis for a broad qualitative ESG Risk Rating. They also offer Product Involvement Research and Controversy Research. Given the increasing focus on CO2emissions, KBC has also selected Trucost to provide carbon data. When it comes to excluding companies, in addition to Morningstar Sustainalytics, KBC also uses MSCI's data and data analysis, so as to provide the most objective possible basis for decisions. The principle is to choose the data provider that offers the best data for a specific aspect.

Source: Morningstar Sustainalytics © Morningstar Sustainalytics [2022]; MSCI © MSCI [2022]; S&P Trucost Limited © Trucost [2022] 

As long as there is no global standard for reporting sustainability performance, your choice of a specific data provider is crucial. The principle is to choose the data provider that offers the best data for a specific aspect.

Kenneth De Bruycker, Responsible Investing Expert at KBC Asset Management

Our own sustainability methodology for countries 

For countries, as for companies, there is currently no uniform definition of precisely what is meant by 'sustainability'. As an asset manager, we could use an index to map the sustainability of different countries. In our view, however, this approach is not ideal because it often only considers a single aspect of the ESG criteria, for example focusing on corruption or the environment. Given our ambition of including a wide range of ESG factors in our country sustainability analysis, KBC has developed and used its own sustainability barometer since 2002, based on the insights of our macroeconomists at KBC Economics. Our sustainability barometer focuses on five themes:                  

  • A country’s overall economic performance and stability; 
  • Socio-economic development of the population
  • Equality, freedom and rights of all citizens;
  •  Environmental performance and commitment; 
  • Security, safety and international relations

To analyse all these themes, KBC uses data from recognised international institutions, such as the United Nations, the World Bank and the OECD, or bodies such as the World Economic Forum.  

Regulation provides a push towards more transparency 

More and more companies today publish a sustainability report alongside their annual financial report. They do this not only out of a desire to inform the general public, but also because governments and regulators are increasingly imposing laws requiring more data.  

For instance, the Corporate Sustainability Reporting Directive (CSRD) requires companies with more than 500 employees in the EU to publish information on how they will deal with ESG challenges from 2024 onwards. They are required to publish information on a range of topics, such as the environment, social issues and human rights compliance, as well as anti-corruption policies and diversity on company boards. The European Taxonomy classifies companies based on ecological activities. The Sustainable Finance Disclosure Regulation (SFDR) defines sustainable investment as investment in economic activities that contribute to an environmental or social objective. 

Whatever the law, for a company to be included for responsible investment, it is important that data is shared transparently. Companies which fail to do so will sooner or later fall by the wayside. 

As a professional asset manager, we connect the dots

More than just climate 

The emphasis on the environment often dominates the news, and rightly so. Global warming means we all face unprecedented challenges. But when it comes to responsible investing, KBC focuses on all three aspects of ESG: not only environmental, but also social aspects and good governance.  

Sustainability sets the tone 

As an asset manager, it’s our job to raise the bar. In doing so, we take into account trends in society and insights from the Responsible Investing Advisory Board. We regularly review our responsible investing methodology. Is it still adequate in today's society? Or have expectations changed, and do we need to adapt our approach? Where can we proactively make changes to help make the world a little more sustainable from an investment perspective? 
We continually seek to raise the bar in this way in our conventional investments, too. Our tobacco policy is a good example of this. Due to its harmful effects, tobacco has been excluded from our responsible investment funds for years. It is a policy that subsequently trickled down to our conventional investments. KBC signed the Tobacco-Free Finance Pledge in 2019. 

Towards Sustainability quality standard 

Febelfin has worked with stakeholders inside and outside the financial sector to develop a quality standard for responsible investment. By endorsing the Towards Sustainability label, KBC is able to offer additional quality guarantee to responsible investors. 

Space for those who are able and willing to learn 

KBC only definitively excludes companies with an ESG Risk Score of ‘Severe’ from its responsible funds. Companies with a ‘High’ ESG Risk Score are not automatically excluded; first, a thorough analysis is called for. However, if it transpires that there is a willingness to take the necessary steps, KBC is keen to give these companies the opportunity to address the ESG challenges that are relevant for them. The biggest ESG gains are often made by companies that are currently underachieving in this area. By not systematically excluding them, we hope to encourage them to improve. 

Transparency is king 

·       You can’t argue about tastes and colours. But you certainly can about sustainability. There are undeniably differences in the way companies are evaluated. There are undeniably differences in data and in the way data is analysed. It is by acknowledging these differences and choosing quality partners that we as an asset manager can make the difference for you as an investor. 


If we want to safeguard our future, we have to make sustainability our top priority. We still agree on that. 
KBC is committed to sustainability, including when it comes to your investments. And so, while 'green' is anything but black and white at present, we are taking judicious steps forward. We hope our approach is to your taste. And that you will choose to make the journey forward with us. 

Our job as an asset manager is to raise the bar while leaving room for those companies that are able and willing to learn. The biggest ESG gains are often achieved by the companies that still have some way to travel

Carolien Bodewes - Responsible Investing Expert at KBC Asset Management

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This article is for informational purposes only and should not be considered investment advice.

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