THE EARLY YEARS
In 1995 a group of professors from Università Bocconi began developing a range of research methodologies in the areas of ethical finance and responsible investing. They made a significant contribution to the setting up of Università Bocconi’s observatory for the study of the dynamics of “value creation” in business enterprises and corporates.
As a natural follow-up to the early findings of the research on the Social Value of enterprises, in 1997 Università Bocconi and Pontificia Università Lateranense established a joint research initiative and set up the “Ethical Finance Observatory” (Osservatorio Finetica). The research conducted by Osservatorio Finetica aimed at creating a methodology to analyze and assess companies by focusing on themes such as transparency, responsibility, trustworthy relationships and ethics.
ECPI FOUNDATION AND INITIAL ETHICAL SERVICES / PRODUCTS
In late 1999 ECPI was founded and formally set up as a company in Milan, under the name “E. Capital Partners”, to seek to pursue the business idea which could no longer be developed inside the universities for obvious statutory constraints. When established, it represented the first entrepreneurial initiative in Europe for the creation and selection of financial products with high social value.
In 2000 ECPI launched the first “ethical rating” model and subsequently a proprietary research and analysis model that rates and selects issuers by taking into account also their “extra financial” performance, focusing on the social attitude of the underlying company or business. The rating model constituted the basis for the first Socially Responsible Investing (SRI) database, an important tool to guide investment banks and asset managers in building sustainable investment solutions. The first ethical index, the ECPI® Ethical Index Euro®, based on the ECPI rating model, was launched and adopted under license as a standard by several fund managers.
In the following years ECPI expanded its research capabilities and rating infrastructure significantly, broadened its product & solutions portfolio. ECPI’s database, rating methodology and indices gradually began to cover every investable asset class on the basis of the same “founding” principle: that any asset class, any fund manager, or any investment, yields a return (and at the same time carries a level of risk) which is a function of a) its fundamental economic and financial performance; BUT ALSO of b) other factors, extra-financial factors related to how a business behaves vis-à-vis the environment it affects, the social factors it interacts with, the set of rules and governance it follows.
EMPIRICAL EVIDENCE OF ECPI ADDED VALUE IN RISK REDUCTION
As ECPI continued its development, the first empirical proof of the contribution in reducing portfolio risk attributable to ethical rating began to surface, aided by independent, third-party research carried out spontaneously by qualified organizations who had been working with ECPI on the notion of making sustainability “investable”.
Driven by a similar concept (i.e., there’s more than just “numbers” that matter in the risk-return equation), in 2005 ECPI created MARS, a rule-based rating model applicable not just to investable securities but also to the fund managers, seeking to identify a fund manager’s ability in generating “alpha” and in mitigating fund-specific risks (such as blow-up, reputation and all related counterpart risks) involved in an investment. The methodology focuses on the operational and sustainability factors of different investment strategies.
THE SUBSEQUENT GROWTH OF ECPI
Following the early years of development, since 2007-2008 ECPI has been consistently following a 3-prong expansion strategy based on these key drivers:
- Broadening of products and services made available to customers, building on the “core” ethical and sustainability tools developed over the previous 10 years or so of “gestation”. ECPI has been seeking to gradually add to the initial screening and research tools more sophisticated investment management products, solutions and advisory services that would embed ECPI’s know-how;
- Internationalization of its activities, given the proven cross-national and cross-cultural appeal of the themes making up the core activities of ECPI; and
- Search for an institutional partner prepared to invest alongside the management team, with a medium-term perspective that would be compatible with ECPI’s philosophy, modus operandi and values.
INTERNATIONAL EXPANSION AND ECPI IN LUXEMBOURG
In May 2007 ECPI founded ECP International SA to lay the foundation of its international presence and activities. The stability, prominence and functionality of Luxembourg as an international financial center helped the Company grow internationally: Germany, UK, Japan, Asia, United States, Poland. Several international cooperation initiatives were launched.
THE MITTEL EXPERIENCE
In the pursuit of its 3-prong strategy summarized above, in 2008 ECPI sealed a strategic alliance with Mittel SpA, one of Italy’s most prestigious investment holding companies. The financial crisis which struck the world following the bankruptcy of Lehman Brothers caused however very significant changes to Mittel’s stated strategy. While the alliance generated a number of benefits, in the end Mittel did not represent the partner who was willing to develop ECPI in the long term and as a result some of the original founders of ECPI took back the leadership of the business from Mittel in September 2010 and decided to look for alternative ways to pursue the original strategy unabated.
THE RELAUNCH OF ECPI IN PRIVATE HANDS: SELECT ALLIANCES AND NEW PRODUCT INITIATIVES
After the buyout, ECPI charged ahead with a new business model adapted to meet the new challenges posed by the international financial markets. Thanks to the strategic position and quantitative know-how of its Luxembourg subsidiary, ECPI grew internationally and secured select alliances and new product initiatives (i.e.: launch of the the first ESG Index Series in China with CSI (ECPI CHina Consumption Index Series); launch of the first responsible investment index series for the Italian market with FTSE Group (FTSE ECPI Italia SRI Index Series); Nomura Securities Japan publishes a series of reports, using ECPI rating data, investigating the relationship between ESG scores/ratings and company performance; …).
In July 2013 ECP International SA was granted “Professionnel du Secteur Financier” (PSF) status. As a PSF, ECPI holds an investment advisory license and is regulated and overseen by the CSSF (Luxembourg’s financial regulatory authorities).
With these recent governance and status changes, ECPI has achieved, following years of investments, the financial strength to both deliver and scale its ESG-based research, rating and indexing solutions worldwide. The Company is currently making substantial investments to expand and grow its ESG and financial advisory services in new asset classes able to provide de-correlated and stable cash flows to investors.