The evaluation of a company’s sustainability profile includes environmental, social and governance factors. The primary focus is the management of these factors by a company – especially where a clear link has been established between an ESG factor and company performance. The respective ESG Scores are at the core of Inflection Point’s data analytics product.
The ESG scoring universe currently comprises more than 5,000 listed companies globally. In addition, we assess non-listed issuers of bonds, governments and supranational institutions on a case-by-case basis using different data sources.
The scores can be accessed directly via FactSet Internal Research Notes (IRN) or in Excel format via a data feed. The IRN includes comments on these scores and selected data to highlight any scoring adjustments made by Inflection Point analysts reflecting their fundamental views.
The ESG Scoring Methodology is described in a separate document (available on request). The document covers the following aspects:
- Scoring Process
- External Data Providers
- Quality Control & Updates
Environmental and Social Impact Assessment
Impact assessments differ from ESG Scores as they primarily measure the effect of companies’ activities on the environment or on society, both positive and negative impacts. The respective analysis is therefore shifting from a focus on supply chains, production and distribution to one that identifies the impact of a company’s finished products and services. This requires a separate analytical approach and different data sources. Impact measurement compliments conventional ESG analysis of companies’ disclosures and allows a more holistic sustainability assessment.
- In-house model for carbon emissions (Scope 1+2)
- Calculation of avoided emissions for solution providers in the energy transition
- Environmental impact data
- Data for sustainable employment (Emploi Durable) human capital analysis
Planned scope: Data requirements for systematic and comprehensive UN Sustainable Development Goal (SDG) impact assessment.
Portfolio Analysis & Reporting
- Portfolio Analysis
We are constantly enhancing the scope of our database of ESG scores and metrics as well as our analytical capability. A core application for this information is portfolio analysis, i.e. the calculation of aggregate sustainability measures at the portfolio level. Basic examples include the average ESG score or the carbon footprint. In order to allow meaningful interpretation of the results we conduct the same analysis for a given benchmark index. This enables insight from point-in-time and trend comparison. Furthermore, we identify the drivers of a portfolio’s sustainability both at the stock level and by sector or geography (attribution analysis).
We develop our portfolio analysis to include new measures as required by portfolio managers, clients and regulators and by building visualisation tools.
- Portfolio Reporting
The Inflection Point team supports La Française Group’s reporting requirements vis-à-vis stakeholders and regulators by providing ESG and climate-related financial disclosures. These include the Group’s compliance with the French Article 173 regulation, which requires investors to explain how they take ESG factors and climate impact into account. The recommendations of the Taskforce on Climate-related Financial Disclosures (TCFD) will increase these requirements further.