Rosenbaum. I am the business services analyst here for Stifel, and I appreciate you're all attending this participating in this virtual discussion with S and P Global's ESG team. I want to thank all the various participants from S and P Global's team for participating, presenting, answering questions from investors this morning. I know the ESG team is very busy these days and I appreciate each of you making time for this event. I also want to thank Chip Merritt, the Head of IR for S&P Global, for making this happen.
The format just for this call, this presentations, we're going to have various presentations and discussions from the ESG team members from S and P, after which investors are encouraged to ask questions by submitting them through the Q and A part of the Zoom application. I'm going to read the various questions and I'm going to likely add some of my own. We're going to do Q and A after each of the segments. And if time allows for it, we're going to also do Q and A at the end as well. I just want to say upfront, while we were hoping to be able to talk more about the synergies and the product synergies about the pending IHS Markit merger.
Over the weekend, the attorneys put a kibosh on that. And so unfortunately, they're not going to be able to answer questions in terms of the merger in potential synergies with IHS Markit. So we're going to have to focus strictly on what is there for S and P Global and their wide range of ESG products as they are today. And with that, I want to turn this over to Evan Greenfield, Global Head of ESG for S and P to kick this off. Evan?
Thank you, Shlomo. Certainly, the attorneys take away all fun, don't they? Really appreciate you, Slomo and Stifel and Carlin for giving us the opportunity to share our ESG initiatives with this audience. And also many thanks to the audience that's assembled today. Certainly recognize this is a busy time of year as it always is compounded by the fact that we're going through the struggles of this pandemic.
So thanks to everybody for joining. I personally appreciate this because I get to dust off my suit again. I was trying to handedly make sure Brook Brothers stayed afloat, but didn't have success with that. In any event, we have a really robust agenda today. And on the next slide, you'll see a bit of the presenters.
We have colleagues from across S&P Global presenting as it pertains to ESG initiatives, both at the enterprise level as well as in our respective divisions. So you'll get to meet our colleagues in a bit. On the next slide, I wanted to spend a little bit of time just talking about the overarching demand for ESG Solutions and where we are in this ESG movement. I've had the great honor of being involved with ESG since the last decade or so. And every year, I would see this exponential increase in demand for ESG integrated assets.
But ESG has never really been tested since the financial crisis when the modern age of ESG came about with a contracting facing share environment. We had that opportunity in Q1 on the heels of the knowledge that the pandemic would be a significant risk to the global economy, a significant health and economic risk. We got to see how ESG would be tested in this downward facing environment. And what I think what we saw was really a watershed moment. We saw that there was in Q1 $50,000,000,000 approximately of inflows of ESG related strategies on the back of $400,000,000,000 outflowing from broader fund universe.
We saw some elements of outperformance happening compared of ESG indices relative to the broader benchmark. And we see greater focus on ESG than we had before. And it was quite significant before. And largely, we recognize that in this pandemic environment, looking at companies that have higher quality management teams, higher sustainability, less volatility, greater adaptability, higher innovation levels, that those were the companies that were getting capital allocations during the height of this riskier asset movement in Q1. And we saw it continue.
In Q2, we've seen about $70,000,000,000 of inflows and about $81,000,000,000 in Q3. Our expectation is that, we're still in the early innings of ESG. We think that ESG will proliferate and will be ubiquitous across all asset classes and all investment approaches and that corporates will continue to lead this journey that they're on of integrating ESG into their core strategy. It won't just be ESG strategy, it will be strategy of which ESG is a significant component. What we've also seen and you may be familiar with the United Nations principle for responsible investing, which is basically 6 principles that is non binding upon signatories that basically assures that they are investing within ESG consideration and they're monitoring their portfolios looking at ESG factors.
Similar to this great increase in ESG inflows that we've been seeing, we've seen a tremendous upswell in the number of signatories to the UN PRI. And today, we're about $100,000,000,000,000 in associated assets. That begs the question, if there's $100,000,000,000,000 of associated assets that have signed up for ESG, where are we in that process? And I would likely conjecture that I don't think $100,000,000,000,000 is fully integrated in the most sophisticated levels with ESG. And then that begs the question, why not?
And our thesis is that the market is still looking for super advanced ESG data analytics, benchmark indices and opinions, and that's what we provide our clients. And we feel that we are exceptionally well positioned to continue to lead on providing those solutions and really developing what we classify as the next generation of ESG data and analytics and other solutions. As it pertains to the next slide, this looks at a little bit as to why again we believe that S&P Global is so uniquely positioned. And it has to deal with several facets. 1, our understanding of company knowledge is really unprecedented across organizations out there.
We have a deep expertise across all asset classes, fixed income, credit certainly from our ratings business, equities and commodities from our Platts business, energy from Platts, a keen understandings of passive and active. Really across the board, we encompass this 3 60 degree view of the financial services ecosystem, further insight into data, news analytics and significant distribution capabilities with 1,000 of corporates, 1,000 of investment and asset managers and asset owners throughout the capital markets community. We have a very significant role in the capital markets. What does that mean for ESG? Well, it helps us create better ESG solutions because we have this very unique and formed review of the financial services ecosystem relative to most other any actor in this environment.
We also are not newcomers to ESG. We are actually one of the pioneers in ESG in the respects that over 20 years ago we created the S and P Dow Jones Sustainability Index, a partnership between our colleagues at S&P Dow Jones Indices and SAM, which is an asset that I believe many of you know we acquired earlier in January of this year. And so that has been a significant endeavor of which corporates that are part of the Dow Jones Sustainability Index see it as a significant badge of honor from their sustainability perspective. And so as it pertains to the next slide, what we're looking to do, as we said earlier, is to create the next generation of ESG data and analytics and become the market standard. And for that, we're building solutions that are relevant and provide transparency to the capital markets that are quantifiable and focused on financially material ESG factors that are factors that you as investors can look at and understand the implications of ESG on risk, on return, on long term value of the security that you're investing into and something that we classify as impact pathways.
How does this ESG factor, how does that related to quality of cash flows, how is it related to earnings or revenue or cost or future opportunity sets of that organization. We're also looking to develop and we have been developing forward looking leading ESG identifiers. We're not backward looking. We're coming up with and you'll hear in a moment from my colleague, Manjeet, who runs our SAM business, about the means of which we're looking at new trends and new opportunities to come up with more thoughtful questions. And we're making sure that our ESG data and analytics fit into the work flows of our capital market participants.
We can easily integrate our ESG solution set with our hundreds of other data sets, whether it's financial or non financial, whether it's alternative or traditional and an integrated factor, such that our clients can have a much better means to assess and to leverage the ESG data in a more holistic environment than today. And the ultimate goal is addressing a spectrum of ESG needs across the board, from screening, exclusionary screening, to risk reduction, to returns enhancements, to better reporting, to better engagement with portfolio companies, to better engagement with your underlying investors to have better reporting to them and ultimately increasing assets. This last slide is what we'll be getting into in the rest of this session. We at S&P Global, as you know, have 4 main divisions. ESG is a horizontal amongst these verticals and really allows us to have an enterprise wide approach and we recognize that leveraging the capabilities, the experience, the DNA of the divisions with this consolidated approach to ESG really allows us to create the most advanced ESG solution sets out there for our clients.
And finally, I'll end on this. We're involved in this ESG journey because our clients have asked us to be. Our clients are looking, whether it's an asset owner or investment manager, to have better analytics in their ESG integration, whether it's a corporate looking for better strategic ESG direction, we're providing those solutions. I will also say that from an energy and excitement perspective, we're getting the best and the brightest from a talent pool that's looking to join these efforts. Bar none, whether it's the most senior members of our organization to the newest employees out of school, they are exceptionally excited about ESG and the opportunity that we present to assist our clients in that journey.
So again, thank you for the time and we look forward to a spirited dialogue. Shlomo, I'll see if you have questions before we turn it over to Manjit.
Yes. You know what, I think that it might be a good idea if you join each one of the participants and I think this is a great introduction going to be presenting. Absolutely. How about we move for that?
Vinjeet, please.
Great. Thank you so much, Evan. So, I wanted to spend just a couple of minutes talking about the work that we do here at SAM, essentially the research framework for ESG that underpins a lot of what my colleagues from the different divisions will talk about in a moment. So essentially our research framework is built around our corporate sustainability assessment. This is what's driving the Dow Jones Sustainability Indices, for example, that Evan spoke about.
And this has been our research framework for over 2 decades now, really making it one of the first longest running assessments of corporate sustainability in the world. So what makes it unique? There's a lot of ESG research frameworks out there today. You know, if you speak to companies, they will say there are a lot of different questionnaires that they receive. There's a lot of different engagement kind of pieces that they are trying to navigate.
But we believe we have a very robust methodology and approach in the fact that we've been engaging with companies for more than 20 years. So the data stems from a time when there wasn't any publicly available ESG ESG data available. So it certainly improved over the last 20 years, but we still believe that companies know their business models best and engaging with companies every step of the way results in the most robust set of data you could possibly collect. The methodology was built by investment practitioners. So we were part of an asset management firm for these 2 decades, meaning that the questions created, the data sets created were intentional.
They were being used and tested in everyday investment scenarios. Companies use this. So we had close to 1400 of the largest, most powerful organizations in the world using the CSA reporting to the CSA this year because they're using this as a management benchmark to drive real change within their organizations. I'll get into it in the next slide, but we feel a company as it relates to ESG. And in the long run, it actually helps a company as it relates to ESG.
And in the long run, it actually helps drive more transparency because we push companies to report more and more ESG data in the public domain to the benefit of all their stakeholders. We have very nuanced scoring and I'll show you that in a second. We have a lot of data that we are basically turning into scores, into insights, into intelligence that can be used in the investment process, which allows for very precise differentiation of companies. We're actually assessing performance and not just some of a tick the box exercise. We have a well balanced methodology that looks at the performance on current ESG issues, but also the awareness of companies on upcoming ESG risks and opportunities.
And as we all know, it is a rapidly evolving field. And also, to my knowledge, we are the only research framework in the world that has a yearly independent assurance really since inception on our analytical processes. Next slide, please. So just to visualize this, this is the CSA in a nutshell. We are looking at up to 1,000 data points on each individual company every single year across 61 different industries, so very industry specific approach.
We take that raw data and aggregate it up into various levels of scores. So question scores, of which there are roughly 100 per company, criteria scores, so those would be things like corporate governance or risk management, climate strategy across the ES and G dimension. So depending on the use case and the need, we offer a wide range of kind of levels of granularity that can be used in different approaches. Next slide, please. This is something worth talking about.
As I said before, we see the value in asking companies and challenging companies on upcoming ESG issues. It's a fast moving field. Companies appreciate our approach because we tend to represent the whispers in the hall in terms of what investors are thinking about next, what's the next big theme in ESG. And because we have this direct engagement with them and we're collecting information directly from companies, we can actually put some of these topics onto their radar long before there's a consensus around what the right metrics or definition should be by some of the standard setters. Obviously, over time, as these topics mature, standards start to emerge, metrics are better defined and we obviously work with others in the industry then to make sure that these are consistent.
But it's about putting these things on the corporate agenda and really challenging companies on how they're thinking about tax way back in 2014 when most people didn't even consider this to be an ESG issue, policy influence more recently or things like fair and living wages, which is something that companies talk about but don't like to actually disclose in the public domain. So we see great utility in the approach that we have and that really differentiates our approach from some of the other frameworks out there that simply scrape a lot of public information. Next slide, please. So to illustrate, I think you need to click one more time just to get that box exactly. So to illustrate, this is a question around human rights.
We were actually collecting a lot of data, raw data on how companies are assessing human rights across their business, whether it's in their supply chains, whether it's in their own operations. So there's 20 plus data points that make up this question. What we bring to the table is 20 years of expertise in turning this raw data, contextualizing it into a score. For those of you who have worked with raw ESG data, even though, you know, people will say they use the same definitions, you need to read the fine print to really understand what they mean. So that's the work that we do.
We spend a lot of time not just taking data at face value or even scraping data at face value. We spend a lot of time going through the data and making sure that it's comparable, it's cohesive, it's accurate. And that's something that we have spent 20 years developing analyst guidance on, training analysts and refining our methodology. Next slide, please. What do we create as outputs?
So my colleague Richard will get into kind of what we offer to clients in a second. But going back to what I was saying, companies really use this as a way to benchmark themselves. So we provide a lot of granularity to companies that then take the CSA as a management tool to identify gaps in their performance versus their peers and steer their sustainability agendas in future years. And we offer this through a whole range of both online, but also more comprehensive kind of offline benchmarking products that we provide to companies. And next slide.
Yes, this is just another screenshot of what this looks like. And so we are constantly developing our technology platform out, which companies tell us is really the most powerful ESG data collection and processing tool that they've used. So I'll stop there. That's kind of the journey of the data into scores. And my colleague Richard from True Cost will talk to you now about what market intelligence does with this.
Thank you.
I guess just to say, any questions at that point for Manjeet on that last section?
Shlomo, you may have been on mute if you were talking.
Let's just continue forward.
Yes. Sure. Okay. Perfect. So, I'm Richard Madison.
I'm the CEO of TrueCar. So, I'm going to talk through today the data sets that we make available to the investment and banking community on the market intelligence platform. So the market intelligence platform is used by about 250,000 users and it integrates lots of different financial data sets. And I think Evan touched on a word earlier, integration. This is what this platform does and this is where we're putting the latest ESG intelligence right in the middle of the different workflows that you as an investor or a bank might be interested in.
So Manjeet eloquently spoke about the ESG scores and the construction of those scores. We also have other kind of very deep data sets on things like climate and environmental data sets covering natural capital and resource dependencies and also positive impact. So looking at the sustainable development goals with varying amounts of coverage from around 15,000 companies, to about 3,500 companies for the, sustainable development goals as well. So, I'm going to take control of the screen and give you, do something which is always a little dangerous, which is give you a live demonstration of our platform. So, I hope you can all see this.
Essentially, what this is, is the market intelligence platform. There's a load of different information here, everything from market prices and specific news and all the rest of it. I have happened to have landed on the ESG homepage. So this is the section that you might be interested in as a sort of dashboard or a front page to our ESG capabilities. You can see a whole host of different information here about sort of different greenhouse gas emission exposures.
You can see some bespoke news that we develop and create on various different things, and some very timely news here. So 27 minutes ago, corporate climate disclosures rose in 20 20, but gaps remain and you can see our latest research. So, for example, here is our research on the sustainable development goals that we just published. And this is really a back test that shows that if you construct a portfolio in line with the sustainable development goals, you could have created a positive active return of 10.4% and 12.7% over those different benchmarks. So different research and also different company information.
We'll touch on that later from our ratings colleagues, real estate, ESG data and various other things. And so what I wanted to do was actually just to look up a specific company. So I'm going to look up Enbridge. Enbridge is an oil and gas storage and transportation company in Canada. And I'm focusing on them because I really want to touch on this company.
It's kind of climate impact. And also this will lead into a narrative that you'll hear from Susan when I pass to Susan from our ratings division as well. So I think what's interesting about this is this is a kind of very intensive company. And if I go to so on this page, it just the standard page that you'd see with financial highlights, earnings estimates here, credit rating information, warrants and transactions. But we have also developed on the sort of series of information on this particular company a whole host of information on ESG, environmental impact and climate in particular.
So what you can see here is Enbridge's ESG score. So you can see it scores 55 out of 100, with that kind of being weighted towards the governance side and a lower score on the environmental side. It's 3 out of 16 in its sector, which is the oil and gas storage and transportation sector. And you can see the breakdown of the different scores here. And you can see them on the governance perspective.
There are varying different scores and varying different changes that you can see. Occupational health and safety, for example, year on year change minus 11. So if I then go to the environmental profile of Enbridge, what you can see on this page is information on the climate performance of Enbridge. So this is greenhouse gas emissions. And it's obviously very specific, but one just a couple of points.
This is a peer analysis. This shows for all environmental impacts that Enbridge is actually has a higher impact ratio than its peers, which means that if you benchmark Enbridge specifically on environmental issues, then it's got a worse impact than its peer group. However, it does disclose very well. So it's a good company from a reporting perspective. And you can see a whole host of information here on various aspects.
So you can see where the company has disclosed, where we've gathered information, what its emissions are. You can see its emissions in its supply chain and also in its products as well. And you can see where we've got all of that information from. I also wanted to emphasize that it's not just the breadth of information that we cover, it's also the depth that's important. We really want to make sure the information we're presenting as part of an investment analysis has to be accurate, has to be relevant.
So what we've also done is for 15,000 companies who've analyzed the location of the assets of those companies and the extent to which those assets are exposed to various different types of environmental impacts from a physical impact of climate change perspective, so whether it's wildfires or heat waves. And we actually have a lot of information on Enbridge already. So you can see all of the pipeline information that we have on Enbridge. You can see an energy map of Enbridge assets as they are across North America, largely but some in Northern Europe as well. And so we've basically taken all of this information about where assets are located and look to the extent to which these assets might be exposed to climate change in the future under 3 different scenarios.
And so what you can see here on this page is the extent to which Enbridge is going to be exposed to various different climate change across 228 of its assets. We say the data quality is an A and you can see where the biggest risks might be. So you can see that, for example, there might be a wildfire risk, for example, or a water stress risk for some of the assets that Enbridge owns. We've also looked to the extent to which Enbridge is aligning from a climate perspective. So is Enbridge able to meet its climate commitments?
Well, actually it should be. If Enbridge was tracking in line with climate commitments, you should be looking at a less than 2 degree pathway. But in fact, it's kind of over its budget. And you can see here the emissions are actually spiking. The blue line shows where they kind of should be if it's going to be below 2 degrees.
If it's going to be well below 2 degrees, it's the gray line. And the yellow one is actually shows where it is today. That's on a total emissions perspective. We also look at this relative to revenue. So you can see the extent to which relative to revenue or value add, how Enbridge is tracking.
So you can see not quite on track. If I then, however, go to the news on Enbridge, you can actually see that we've tagged all of the ESG news relevant for Enbridge. And you can see here that Enbridge actually has recently announced a net zero target. So it's actually said it's going to slash its greenhouse gas emissions by 35% by 2,030, which shows ambition. And so if I then go back to what that actually why is that relevant?
Well, actually, that's relevant because it's relevant from a future perspective. What is Enbridge's strategy to meet climate goals? And that's very important because we're seeing a lot of regulators imposing climate goals on companies. And in fact, even today, the UK government announced that, as part of its Brexit deal, it will be implementing a carbon trading scheme for the United Kingdom separate to Europe. So we're going to see carbon being priced ever more, and that will have an impact on the operations of different companies.
So we want to cover that And that's what we want to pick up in the data that we show. So I will pause there. I don't know whether there are any questions. Yes.
Hi, this is Shlomo. I apologize. I had some technical difficulties. But I thought and so I thought I would just kind of throw out over there. And I'm going to ask also Manjeet because we didn't ask any questions there.
Maybe each of you can just talk a little bit about does anyone else do anything similar to what you do? For example, like Menonji said that there's other people sending out surveys. Do you feel like the competitive environment is becoming different? Or do you feel like you are at a position where you're just far enough ahead of other companies that or other products that you feel that for what you have, you are just totally differentiated? And maybe, Richard, you could start out with that and maybe afterwards Manjeet can talk about that.
Yes. So I'm going to let Manjit talk about how we engage companies as part of our standard practice. He's already touched on that. But what I would say is there are several different components as how we get information and how we make that information useful. So we do engage companies directly and we ask them to give us information.
Some of that information is actually not normally available in public reports and we directly question the companies. If we don't get information directly from the companies, we'll of course do whatever in our stars, which is search public disclosures and look for that information there. But we'll also double check the information. So one thing we do across all of the 15,000 companies that we cover on climate is we really standardize and cleanse the information. So we don't
just assume that what
a company has reported is actually for example, the control accounting method, when for example, the control accounting method when, in fact, their financial accounts might be using the equity accounting method. And that's an apples to oranges comparison. So we have to do quite a lot of standardization and normalization of information. And we do that and we show the companies how we've done that. And the final thing I'd say is where we don't get information from the public domain, where we don't get information through direct engagement, we build models.
And so we've got models that can look at the extent to which a company's supply chain, company's operations and its products, what kind of emissions they would have. We've got a very detailed mapping of a company's activities 4.64 sectors. And that's a custom mapping that we do that includes a lot of different activities, including sustainable activities. And we've got models that we build from the bottom up. So building models from the asset level.
So the assets owned by companies across the world. And that's important because you might think climate change is a global impact. But in fact, it's a very local impact that's going to be felt by companies when regulators start to regulate on climate change. It depends on where you are in the world and where your operations are. So, we build bottom up models.
But, Manjeet, do you want to touch on the engagement process?
So just briefly on that, as I think Manjit
Manjit, you're on mute.
I think he's on there now. You on there, Manjit?
Sorry, I was having problem with my microphone.
Can you hear me now? Go ahead. We can hear you. Yes, we can hear you.
We can hear you. Yes.
Sorry. Can you repeat that, please?
I think it was really just comment on the engagement process that we go through briefly in terms of engagement companies and how that's differentiated from what others will
do?
Yes, sure. I guess the starting point for us is that we reach out to documentation and supporting evidence rather than scraping what's on their website and then getting them to double check it. But what we know from speaking with companies is that they often I mean, there's obviously a piece of information that they would like to see, maybe prefilled for them or collected in advance as sustainability reporting progresses. But often the quality of the information collected from the public domain doesn't necessarily accurately reflect the story that they're trying to bring across. And often in that engagement approach, where they are then sent a questionnaire to review, they either need to spend more time kind of correcting it or there is very little appetite to kind of change things based on additional information that they would provide.
So what companies appreciate about our process is that they're really kind of in control of the narrative. Well, where we come in is we verify all the information they provide us. So we ask for quite a lot of internal documentation, whether that's around risk management policies or HR related information that you would normally find kind of discussed in a very high level in the public domain, but they probably wouldn't go into that much detail. And it's a learning for us. This way you have a we have a constant two way dialogue with companies where they inform us about feedback on the methodology, what they find relevant, where they see areas for improvement and we provide them feedback on how they according to our methodology, how they're doing on some of these upcoming ESG topics.
So I think that is has historically been very enriching in terms of making the assessment methodology very robust and comprehensive. Great.
I'm just going to get one more before we move on to the next presentation. This is a question from one of the participants. Can you just ask, Rich, one of your screens showed high level ESG scores for each pillar of the ES and the G. Who calculates these scores and are they based on the SAM data?
Yes, they are based on the SAM data. So, it's this screen here. And you can see that these calls are based on the SAM data here.
Okay, great. And let's move on then. Thank you.
Wonderful.
Susan?
So, my name is Susan Gray and I lead ESG from a ratings perspective. So now what we're going to do is take that previous question a step further And talk about the increasingly sophisticated ESG market that we're seeing evolving and the need from investors to actually really be able to have a deeper dive into ESG on a company by company basis. At the same time as we were hearing that from investors, we were also hearing from companies that as they were spending more and more time thinking about ESG in terms of their long term business strategy, the disruption, the technological change, the factors that they're taking into account as they build out their plans for the future, they also wanted to have the opportunity to be able to explain that strategy more comprehensively to investors in the market. And it was out of that, that we developed the ASG evaluation. What the ASG evaluation does is it involves our 1500 rating analysts around the world who spend all their time talking to companies and investors and it builds on the data and benchmarks from SAM to actually present a even deeper and more engaged discussion in a similar sort of construct to a credit rating of a company.
And this is an on request product. It goes beyond the credit rating, but it does provide a deeper dive into the company's plans to manage risks and opportunities in the future. And it involves a discussion with management and a board member, our analytical team who cover the company, our sustainable finance team, and it allows us to write a report, which sets out how we see the company's performance on a relative basis globally relative to all other companies in the market, both on a sector and regional basis. And I'll just quickly take you through the components of that approach. So as Richard said before, Enbridge is and this is one we just published the other day, which is why we thought it would be interesting to go through it.
So it's a midstream company operating in Canada and has a significant natural gas business, has announced intentions to decarbonize its business and also has significant pipelines. And if we just go down a little bit Richard to the bottom of this page, you'll see that the way we look at the company as we take the data and benchmarks that have been collected through the corporate sustainability assessment. And we ranked the company on a relative basis by sector and by region. And the key thing here in terms of the ranking by region is that this company is located in Canada where we see that a stronger regulatory environment can potentially position this company better in terms of its capacity to deal with its exposure to risks in the future. So the profile score really looks at what is the company doing today and how is it set up for performance in the near term.
Then we have the discussion around preparedness. And you can see this detail in here, the component scores that build up to the profile. Then we build up to the preparedness assessment. And in that preparedness assessment, we're having extensive discussions with the company, with the board, we're looking at governance, we're looking at activities, we're looking at the company's awareness of the risks and opportunities it's facing, its assessment of those opportunities, how it goes about assessing those opportunities and what its action plan is. And we are also looking at how that action plan is disseminated through the company from a cultural workforce perspective and from a decision making perspective.
And you can see, in this particular case, the score was strengthened by a strong preparedness opinion. So what this does is this allows investors who want to do a deeper dive into the company who may not have the opportunity to engage directly with management and a board member to really see the benefit of a very informed and engaged discussion with the company and an independent assessment of the company by S and P Global Ratings. So that's one key piece where we are able to take the deep data and benchmarks from SAM, from TrueCos, from all across the business and build it into the our evaluation. And we're undertaking at the moment, hundreds of evaluations, well over 100 evaluations around. And then the second piece that I just quickly wanted to touch on is credit.
And ESG is fundamental to our credit analysis. We actually look separately at management and governance as part of our corporate credit ratings. And what we've been doing over the last couple of years is providing more and more transparency as to how we see ESG impacting a credit outcome. So this is the sector report card for midstream, where we've gone through all the key credits in the midstream sector and talked about how we see these companies being positioned on a relative basis in terms of the impact on their credit rating of ESG factors. And so that, and in addition to the paragraph that we write in each of our research updates actually goes into our analysts view on the credit perspective, the relative risk of default perspective that ESG impacts.
And I might just stop there and see if there are any questions.
Okay. I'm going to just pull and see if there's any questions from the audience. Again, I just want to encourage you to submit any questions through the Q and A area within Zoom. And I just want to throw one out there to you, Susan. Could you just talk a little bit about, do you know what you're doing that might be different in terms of your assessments than what some of the competitors might be doing?
Because there are a number of just a few other ratings agencies, one of the main one and then some other ones as well. And maybe you can talk a little bit about what you're how you think what you're doing might be unique?
Sure, I'd be delighted to. And as we were talking earlier, a lot of it is around engagement. From a sound perspective, we obviously have deep engagement of the companies that fill out this corporate sustainability assessment. We're taking that a step further with the ASG evaluation, which has been recognized as being relatively unique in that sense that we are sitting down with management, we can take private information, we can have very frank discussions with our analytical team who already know the company very, very well and take that discussion to the next level and then essentially write a report which the company can choose to keep private, it can choose to share it with its investors or it can publish that report. So it's really providing an extra lens in a market that is increasingly focused on really understanding what the forward strategy is for a company and how engaged the Board is.
We don't think anyone else is really doing that at the moment.
Think we're going to go to the next presentation and we'll kind of ask some of the other questions after the next one or the final one.
The next presentation will change the order somewhat. We're going to go to our Platts division for Nick to present quickly in interest of time and then we'll go to index. There was an index question and we'll get to that when our colleague Reit presents an indices.
Hi, everyone. Thank you, Evan. Thank you, Shlomo. My name is Nick Kapoor and I oversee the Global Gas Power and Energy Transition product offerings at Platts. Before we jump into the presentation, I wanted to give a little of context around why we at Platts care about energy transition and why this will be an increasing focus in the years ahead.
The contents of this webinar are clearly focused on ESG, but we at Platts are really focused on the E or the environmental focus of the equation. So you might be asking, well, what is energy transition? If we go to the next slide, I'll briefly try to touch on this. Here you're looking at effectively a Sankey diagram created by our colleagues in Platts Analytics. And we view energy transition or redefine it as the energy sector shift from fossil based production as outlined on the left, such as oil, natural gas and coal to renewable energy sources like wind and solar as well as lithium ion batteries and hydrogen.
And the primary reason for this shift as you all know is the overall trend decarbonization. So what you're looking at is effectively the source of energy on the left going to the demand centers on the right and a barrel of oil equivalent. And if you go to the next slide, this is how things we estimate in Platts Analytics will change over the next 30 years under a 2 degree scenario. So you can see this has profound implications on producers of oil and gas, which are our largest clients, as well as new demand centers on the right and where a lot of these new carbon free or carbon neutral sources will shift to. And so that's effectively how we view energy transition.
If you go to the next slide, this slide was also generated by our colleagues in Platts Analytics and it tells a fairly similar story. You could see here that fossil fuels are set to change fairly significantly in the next 20 years under a 2 degree scenario, but more at a measured pace in our baseline forecast, which is indicated on the top of the non dotted line. And as you all know and many of you are in analytical roles, it's very hard to predict the next 10, 20, 30 years given black swan events like the coronavirus. According to our analysts, we predicted that or we estimate I should say that COVID has affected long term oil demand by around 2,500,000 barrels per day, which in turn has greatly reduced carbon emissions. But to put this in perspective, to achieve the 2 degree scenario goals that set out by the Paris agreement, you're going to need 10 times the emission reductions resulting from COVID to reach that mark.
So the point here is that regardless of what happens in the near term, you're still going to need demand for fossil fuels to maintain our carbon goals. So if you go to the next slide, this brings me back to energy transition. So many of you know that Platts has become the world's largest commodity information provider over the last 110 years by providing price transparency to global commodity markets. Our strength as a price reporting agency is well known, but we endeavor to be a one stop shop for all of our clients. So a few years ago, we embarked on a fairly ambitious plan to expand our capabilities by acquiring a number of entities to create Platts Analytics, which is on the bottom left.
We've also taken steps to diversify around our core energy markets by launching new assessments and benchmarks, so we can withstand various commodity cycles and shocks, which is slightly cut off on the bottom right, which is really to diversify outside of energy. The 3rd diversification strategy we have is to really launch into energy transition, which will really prepare us for markets of the future. We hear and see our customers investing in areas like hydrogen and renewables and we want to evolve with them as this transition takes place. So we believe that energy transition will not only be a growth area for us, but will also help us all of all of it. But the point here is that we've actually been covering energy transition for well over 15 years.
That might come as a surprise to folks, because Platts is well known in oil and gas. But what we've seen is that in the last few years alone, our offerings in the space have accelerated. Pricing and analytics team, they're pretty good at listening to our clients' needs and delivering tangible solutions to fit those needs. The problem has been finding the various content sets, the various prices, news reports and analytics has been a challenge as we've been forced to maintain a number of disparate platforms over the years. So just to put things in perspective, if a large utility client wanted to understand fundamentals around EVs and its effect on gasoline displacement and prices, you'd have to navigate across 3 different platforms and a series of PDFs to find what you're looking for.
So given that dynamic, our first goal at Platts has been to make our offering more discoverable, make our content more discoverable. And the products listed in bold that have been identified as some of our most sought after content sets by our clients will be part of our upcoming energy transition offering. And so if you go to the next slide. So it's important to know that we recently launched a minimum viable product or MVP of what we call our 13th commodity, the energy transition service on the Platts platform. So it's been publicly disclosed.
We launched our Platts platform earlier in the year, which is our one stop centralized location of all of Platts content news and prices, which we're going to continue to invest and roll out in subsequent months and years ahead. We launched a 13th commodity service line is what we call them, a 13th section of the Platts platform focused exclusively on energy transition, because we believe that this is going to be a very topical area for clients not just today, but in the years ahead. And if you go to the next slide, it's also going to serve as a launch pad for adjacent content, excuse me. So for example, if clients are interested in biofuels, we have a whole agricultural component to it and Energy Transition will have components of biofuels that some clients may be interested in. So not only will it be a discrete standalone offering, but it will also be integrated with the rest of core Platts.
So we're looking forward to launching this service externally to clients in early next year and be happy to take questions in the next few minutes before we move on to the next presentation.
Yes, thank you. I think because we're coming closer to the end of the hour, I think we're going to jump to the next one and then we'll do kind of questions more together after that, if that's okay.
Sounds good.
Hi, everyone. This is Reade Stedman. I oversee our ESG indices within S&P Dow Jones Indices. And it's been an incredibly active year. We expect a very active year in 2021.
We have many different indices, some of which have already been mentioned, such as the Dow Jones Sustainability Index. I thought that today I would just focus in the short time that I have on 2 index families that we think are going to be growth drivers for us in the years ahead. The first that I'd highlight thought I'd highlight is the S and P Paris aligned and climate transition indices. The second one would be the S and P 500 ESG Index. So first of all, the S and P Paris aligned climate and climate transition indices, these are indices that we've launched earlier this year.
They really are rooted in 2 frameworks. The first is the first framework is a framework that came out from the European Commission meant to define what the minimum standards are for a climate transition index or one that's aligned with the Paris agreement. The second framework that we based these on was the task force on climate related financial disclosures, the TCFD. And together, these come these come together in 1 index methodology, to create a portfolio of companies that allow institutional and individual investors to invest in a way that their index over years, the strategy is decarbonizing. In this instance, it's a 7% year on year decarbonization through your investments.
And in that way, companies are being incentivized. They're being rewarded through the capital markets for the efforts that they're making in terms of how they're reorienting reorienting reorientating their business in such a way that they're helping us on a global basis achieve that goal. We had touched on Enbridge earlier. I thought I'd just mention, as Richard said, that that particular company is aligned with a greater than 5 degree climate change scenario. And so they actually do not make it into these indices, not just by virtue of the path that they're on, but also the industry that they're in.
And so that's how that particular company plays out in these indices. If we can go to the next slide. We find that it's not just the methodology, but it's a broad range of attributes that really appeal to investors. So these indices again they it's not just that they are aligned with the Paris agreement but we actually made them such that they were meant to go beyond the minimum requirements of the Paris agreement. And when it comes to the various regulations, again, the aim was to be at a minimum in alignment, but again, to go beyond the minimum basic requirements.
The key to growth, not just in these indices in terms of the investments that we project, is really how it's not just how they're being used, but the role that they're playing within investors' portfolio. So if we look at, say, historically how ESG and the CSIP have been used, they may have been used as benchmarks for, say, a satellite allocation of an investor. But now they're moving into the core part of an investor's portfolio. And these are really meant to be broad, broadly diversified indices meant to underlie the very core of investors' portfolios. So if we can go to the next slide, What makes this approach different?
What makes our approach different? This is a question that's come up several times. It really comes into the technology in the data. And again, we use true cost data in these indices, but also SAM data in these indices. And it's not just that there's great data going in, but it's the analytics behind them.
So we have, in this instance, there's a combination of techniques that are used to develop what we call our transition pathway data set. And we looked at companies that are, say, high emitters within high emitting sectors. And we have a particular approach when it comes to them, the sectoral decarbonization approach. And then we have another approach that applies more broadly across all companies and industries called Geeva, which is greenhouse emissions per unit value added approach. And so we combine these different approaches.
This is and this is something that is unique to us. Our competitors don't necessarily have this approach where we're looking back in time with an individual company and then projecting forward in terms of the pathway that they're on. And so this is something that has really drawn the market to us. We can go to the next slide. So just to talk about the S and P 500 ESG index, our aim is to make this the global standard for U.
S. Equity ESG investing. And we feel that we're setting the foundation for that to really come about. So at this point, we have multiple ETFs listed in the U. S, across Europe and in Canada.
We have a futures trading on the CME and these are definitely gaining momentum, where when these launched, we may have seen, say, just a handful of contracts trade each day. Now we're seeing regularly 500 to 1,000 contracts trading each day. We've had options listed more recently on Cboe. So these listed on September 21st this year. We see strong interest in this index across channels and geographies.
And we really expect 2021 to be a banner year for this index. And it's not just that this index is attractive on its own, but it's really the various different solutions that have supported this index or that feed into it. So, Manjita talked about the corporate sustainability assessment. This is the base data that is going into the S and P 500 ESG index through the score, through the ESG score. And as that solution grows in prominence, so does the index.
And as the index grows in prominence, so does the CSA. And we've actually had many major companies come to us as this index has grown in promise and have asked, you know, how is it that we can participate in the corporate sustainability assessment and make sure that we're really conveying our ESG attributes in the best way possible. And of course, that leads to them, you know, participating in the CSA. So, a good story developing within the index group. We feel that we have great momentum leading into the next year.
So I guess we'll open it up for questions.
Okay, great. I know we're coming towards the end over here in time and I appreciate you guys and women staying a little bit extra just to answer a few questions that have come in through the audience. Of them I just want to I'll just start with 1 on ESG and ETFs. And I was wondering if you can just talk about the competitive environment. There's kind of 2 major, I guess you could say, leading index providers that are out there.
And I wondered if between you and MSCI, if you have any thoughts about where one of you is versus the other in terms of the competitive environment and what you're doing and who might be kind of further ahead in terms of indices over there?
Sure. So it's definitely the case that MSCI has come out very strong out of the gate. We acknowledge that. And it's the case that their competitive positioning in Europe, which is really the heart of ESG, has added to that strength. Another key element for them has been some of the key some of the partnerships that they formed most notably with BlackRock.
I would say in our case in terms of how we're countering, we have also recently announced in April of this year, we announced a partnership with BlackRock where we're going to focus on the core U. S. Equity indices. And in September of this year, there were new ETFs that were launched based on our indices, these sustainability screened indices. And we feel that those are going to be very attractive to investors.
We think that it's not just going to be Europe where the growth is going to come from, but we hear from a lot of different sources that U. S. Wealth in particular is a very promising area. And we feel that we're going to find opportunities in
terms of in terms of the SAM data being very differentiated, have you guys run any tests in terms of correlation between some of the data that you have provided and the outputs that come out versus some of the other ESG providers that are out there to indicate that, hey, we are XYZ correlated, but maybe more accurate or some other tests that you can talk about in that way?
I can take that. There was actually quite a large, quite comprehensive study done last year, I believe it came out by researchers at MIT, of which we were certainly also very involved. And they did an assessment of the range of kind of ESG ratings that exist today and the correlation to each other. I think what they tried to explain in that paper is, look, that there are different ratings. And I think all the ratings, whether you looked at MSCI or Sustainalytics or ours, they were in some areas more correlated than in others.
But I think what the paper tried to point out is that also the starting point is very different. So the approach to how you construct an ESG score and how you define financial materiality or whatever your guideline is can vary. So for example, one methodology may use a more of a risk based approach. Others may use something that's more kind of steeped in financial materiality. Others may be more industry specific.
And obviously, when aggregating then the individual data together, you will result in different scores. What we see today as well when we speak to a large number of our clients is that they're actually kind of taking a lot of these different scores and building their own view on ESG internally. They have they need to have their in house view. And as they become more sophisticated in the understanding of ESG and how these methodologies are built, they feel more comfortable taking different data sets and actually working with them side by side.
And just one quick comment there is, very well said, Manjeet. When we were making the acquisition of SAM, there were many thesis of part of that acquisition. But a couple point out as it pertains to that question is that Sam grew up under an asset manager, Robico, that we're looking for Sam to provide ESG data and insights and investment signals were utilized in that process. So what was developed and geared toward an investment management use case, which got us very excited because that's who we're commercializing a lot of the data with investment managers as well as the fact that through the corporate sustainability assessment, the survey, it is a much more robust holistic understanding of the ESG profile of that corporate because of the questions that we ask and the answers that are presented, which aren't always available in the public domain. So instead of having a skewed response set from the public domain of just what's published by the company or mandated, we have the whole gamut of material ESG factors.
Great. There's one other question that came in for Susan in particular about what the coverage is in terms of the ESG ratings completed across the corporate universe. And is there what happens with is there other ESG scores if your credit analysts haven't had a chance to kind of look at it and evaluate it? And if someone is using your product, can you tell whether the corporate analysts have actually had a chance to kind of weigh in on your ESD scores? So kind of a few different questions in there.
You can
So I'll try and answer that very succinctly. So first of all, we have our credit ratings. And as I said earlier, to the extent that ESG impacts the credit rating, we are writing about it and it is something that is part of our research update that we're publishing and we've all got all the sector report cards that we referred to earlier. In terms of the ESG evaluation, it's a relatively new product and coverage is building. As I said, we've got well over 100 that are completed or underway.
Some are public, some are private. And so essentially, we're building it out and providing that increased transparency and understanding to the marketplace. But in terms so the credit analysts will have reviewed the score to the extent that it is an ESG evaluation But to the extent that credit analysts are not involved in the S and P Global ASG scores that are published.
Okay. I know I've kind of held everyone here about 10 minutes past the time that you've all agreed to. And I really appreciate all of you taking out your time to go ahead and do this presentation and answer the questions that have been out there on the floor. Thank you again. And if there are follow ups, I may encourage all the investors to I mean, I'm happy to send them along to the company, but also to touch base with Chip Merritt.
Chip is great, very responsive, very knowledgeable. And he is available also to go ahead and reach out some of the participants that are here as well. And with that, I wanted to just kind of conclude it. And again, thank you everybody for participating this morning.
Thank you. Thank you, Shlomo. Thanks, Al.
Thank you.
Thanks, everyone.