Sustainability Scoring System
We developed a proprietary scoring system for listed companies to reflect our sustainability driven investment approach
In 2014 our proprietary methodology called Environmental Impact Analysis (EIA) was developed to verify and capture the real-world impact of private equity portfolio companies through 11 metrics which represent how companies can contribute to Resource Efficiency and Pollution Control. Ambienta X has worked alongside the S&S team in the evolution of the EIA used in private equity, developing the Environmental Sustainability Scoring (ESS) system for listed equities. The ESS is composed of three levels:
- The “Sustainability Score” is a score ranging from -1 to +1 assigned to each reporting division of a company indicating a positive or negative contribution to the 11 Environmental Metrics
- The “Ambienta Sustainability index” (ASI), our single holding indicator, represents in one figure (between -100% and 100%) the contribution to Resource Efficiency and Pollution Control of each individual company and therefore the correlation of the value of a listed company to environmental sustainability and related trends.
- The “Sustainable Notional Value” (SNV) is a portfolio indicator, for our long/short strategies, which provides the net sustainable value of the portfolio as an indication of its contribution to Resource Efficiency and Pollution Control. The SNV of our long/short strategies needs to be larger than the Delta Notional Value, ensuring our net exposure to sustainability is larger than our net exposure to the market.
These metrics are directly used for the construction of our portfolios.
Ambienta’s ESS is based on detailed fundamental analysis of a company, combined with an assessment of the underlying sustainability trends to which the revenue and other cash flow streams of the company are exposed. Such analysis is updated at least once a year. Hundreds of companies have been evaluated utilising this proprietary methodology and Ambienta reviews and reports to investors on sustainability metrics on a monthly basis.