Lyndon Park:
Lori, do you have comments on the ratings?
Lori Keith:
I just have a quick comment in terms of the coefficient correlation, youre absolutely correct in the sense that the ratings are not consistent.
Weve done our own assessment, it looks like its about point four in terms of the overlap and rating. So I concur with Mike, I think that more standardization, consistency of frameworks utilized will lead to better data, because I think
whats lacking is significant data gaps thats being provided to these ratings. And so theres really that lack of disclosure thats creating, I think in many cases ratings that dont necessarily reflect whats
happening at the companies. And so, again I would reiterate my position that its really important for companies themselves to be forthcoming and providing information and some of these areas of disclosure that weve talked about on this
call, as that can really obviously help those companies to improve not only communications with their investors, but other constituents too.
Lori Keith:
I mean, certainly employees, another constituent hats very interested in understanding companys sustainability story, consumers. Those are all
extremely important constituents that I think are increasingly looking at how is this company position relative to corporate purpose and their ESG story, and companies that can get out in front of that can really I think gain an edge with those
constituents.
Lyndon Park:
Thank you, Lori. Oh, Hillary,
please go on.
Hillary Flynn:
I was just going to add
really briefly, but I agree with both Mike and Lori, the one thing I was going to mention is that, we do have a number of clients that do rely on these ratings, and sometimes that can lead to difficult conversations, and again, just one example this
week, one of our ESG analysts had a company because again, we have our own internal ratings. Because we dont always agree with the external ratings, and he had upgraded the ESG rating for one of our portfolio companies, yet the MSCI
Sustainalytics of the world had not. It still had a very negative rating company. In the end, one of our clients was really pushing back on the portfolio manager, and the portfolio manager said, Well, my ESG analyst has a much more favorable
rating and heres why. And in the client can say, Well, when are the third-party providers going to upgrade it?
Hillary Flynn:
We cant control them. And if anything, we think thats part of our edge, is that we engage with the company, we have our own material audit
framework. And so if we actually can identify that improvement earlier that is an opportunity for us, and interestingly, just this week, but the ratings provider was caught up, and again, it was six months later, but it was one of those things where
that portfolio manager had to sort of defend his position in the company, because these third-party ratings agencies do last often with their ratings.