FRR 2016 ANNUAL REPORT36
A call for tenders in 2016 led to the selection of a new service provider to assess non-financial risks to the FRR s portfolio. Accordingly, Vigeo Eiris analysed the portfolio for the first time at the end of 2016.
Analysis of the portfolio by region
The 2,481 securities in the FRR s consolidated portfolio and covered by Vigeo Eiris s research are divided into two zones: developed countries and emerging markets. The former comprises three continental regions: North America, Europe and Asia Pacific. North America is the most strongly represented, and is also home to the heaviest concentration of controversial companies.
Analysis by country
All regions combined, of the 10 countries home to the largest number of highly controversial companies, nine are developed, with five in Europe (United Kingdom, France, Germany, Italy and Spain), two in North America (Canada and the United States) and two in Asia Pacific (Aus- tralia and Japan). At number nine, South Korea is the only emerging country in this ranking.
85% of the most controversial companies origi- nate from these 10 countries. The United States is the country with the highest number of com- panies subject to controversy by absolute value. The presence of US companies has a substan- tial impact on the portfolio at a consolidated level. They account for 33% of companies, 41% of the most controversial companies, and 43% of controversies. One possible explanation for this lies in the predominant culture and existing legislation of the United States, in which citi- zens, alone or together, have easy, frequent access to justice. This would naturally increase the number of controversies heard in court.
Analysis by ESG area for the most controversial companies
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