Q&A with Sakis Kotsantonis of RGS

We are mission-driven, and that is not just a vision statement on our website but a shared passion of every team member to have a positive impact on the world through our work. Our vision is to transparently capture external impacts companies have in a way that drives investor and managerial decision-making. All companies have impacts, defined as changes in important positive or negative outcomes for people or the environment, almost all of which are not currently measured in a comparable or comprehensive way. Given that we lack clearly defined impact metrics and transparency, considerations on the impact companies have are likely to be absent from decision-making.

We have set out on an ambitious journey to address this gap. RGS is providing actionable signals for investors and companies, by first measuring real impacts that matter the most and by connecting those impacts to accounting statements through monetization. Similar to the development of financial accounting as the infrastructure and the necessary condition for large-scale capital markets, we believe that the development of impact-weighted financial accounts is a much-needed infrastructure for the development of capital markets that are driven by sustainability considerations.

RGS is bringing impact to the ESG investing market.

The dissatisfaction with the current state of ESG metrics is a topic featured prominently in the news lately. Earlier this year Morningstar cut 1,200 funds from their ‘sustainable’ list, including products with a combined $1.4tn in assets after finding ‘ambiguous language’ in legal findings. Regulators are intensifying ESG scrutiny as greenwashing explodes. In one of the most recent such events, the CEO of Deutsche Bank’s DWS resigned after a police raid on their offices due to allegations of greenwashing.

RGS is differentiated from our competitors in 5 key ways:
1) Our impact assessments are based on concrete outcome metrics rather than inputs or intentions to avoid greenwashing.
2) We move beyond traditional ESG metrics by being the first ever to quantify the impacts companies have through their products and services in a scalable way.
3) Our analytics engine translates ESG data into monetary values for easy comparison across industries and impact dimensions and integration into financial modelling frameworks.
4) Our platform allows investors to analyse both public and private companies using a consistent impact framework.
5) RGS RIFT is based on a robust, researched methodology, aligned with Harvard Business School’s Impact Weighted Accounts Initiative (IWAI).

- Growing market
Global spend on ESG data and analytics is set to increase from $2.2 billion in 2020 to $5 billion in 2025. There are currently more than 4,600 investor signatories to the Principles for Responsible Investment, that have stated the value of ESG impact on the performance of their investment portfolios and are committed to using ESG metrics in their analysis and decision-making. The number of signatories is also increasing at a 17% annual rate.

- Market consolidation
Consolidation among ESG data providers continued even through the Covid pandemic. Several big financial companies have looked to build out their ESG data offerings through M&A in recent years. Moody’s has made multiple deals in the last 3 years including the acquisition of Vigeo Eiris. Institutional Shareholder Services (ISS) has acquired four ESG data and research providers since 2015, and MSCI and S&P Global have made multiple similar investments in the space. Even companies that were not part of the traditional ‘ESG ecosystem’ of data and analytics providers are now making investments in the space. For example, IBM Acquired earlier this year Envizi to add ESG analytics tools in their services and move into ESG. As some of the smaller players have now been acquired there is a massive opportunity to bring the next big innovation in the space.

- Regulatory tailwinds
The ESG reporting landscape is moving towards global disclosure standards. The European Union has been leading the efforts, mandating detailed disclosure across a wide range of sustainability issues from companies and investors operating in or with the European Union. In the United States the SEC has proposed rules to enhance and standardize climate-related disclosures for investors. There is no going back on ESG and taking a compliance-only approach with respect to ESG data is a high-risk strategy for companies and investors.

- Last but not least this is a great opportunity to align your investments with your own personal mission and desire for a positive impact by helping an innovative team willing to take bold steps to transform capital markets.