S-Ray: Frequently Asked Questions

S-Ray™ can empower investors, companies and everyone to make better day-to-day decisions for a more sustainable future. Here are some answers to some typical questions:

Where does the data come from?

Arabesque S-Ray™ is a data-driven platform that combines sustainability information from a broad and ever-growing set of sources. While we do not disclose the actual underlying sources, we organize all data in two main groups.

  1. Analyst-based long-term sustainability assessments
    • Across different rating providers, Arabesque S-Ray™ maps, compiles and aggregates raw data on over 200 sustainability metrics.
    • Differences between analysts are actively managed and interpreted over time, resulting in aggregate analyst scores per underlying topic.
    • These data points form a good starting point to understand a large variety of sustainability issues from an analyst perspective, but are typically slow to reflect changes.
  2. News-based short-term sustainability signals
    • Further to the latest analyst ratings, Arabesque S-Ray™ actively tracks sustainability-related company news from over 50,000 public sources across 15 languages.
    • All relevant news is organized per company and topic, and is assigned a news value – which is a function of importance, influence and relative novelty in comparison to existing analyst views.
    • These news signals allow for a timelier adjustment of Arabesque S-Ray™ scores, on top of the analyst-based long-term assessments.

Both GC Scores and ESG Scores draw from these two core types of data. However, different underlying data points will be used in the construction of both scores for each company.

For the Preferences Filter, Arabesque S-Ray™ mainly relies on revenue data, providing a better understanding of a company’s business involvements.

What is the difference between the GC Score and the ESG Score?

The GC Score is a normative assessment which does not take into account industry specificity or financial considerations. Indeed, companies are expected to universally respect the United Nations Global Compact principles, regardless of industry or financial benefits. In contrast, the ESG Score is geared towards understanding the potential for future financial outperformance. As such, the ESG Score applies an industry lens and only considers those criteria which are believed to have a significant impact on a firm’s financial performance. Together, the GC Score and ESG Score provide a powerful and holistic understanding of a company’s sustainability profile.

How does the Preferences Filter determine a company’s business involvements?

In determining a company’s significant business involvements, Arabesque S-Ray™ considers the breakdown of its revenues as reported through a number of different data sources. Whenever we estimate that the company is deriving a significant portion (>5%) of its revenues from any of the business activities available through the Preferences Filter, a cautionary flag is raised. We also take into account a company’s indirect revenues by analyzing the ownership structure (e.g. owning or being owned by another company with a significant involvement).

Note that the Preferences Filter flags are only aimed at allowing users to compare a company’s activities with their personal values. The flags do not influence the GC or ESG score.

I am not an investor. Can I still use S-Ray™?

At Arabesque, we believe in Generation S,[1] a growing movement of people of all ages, cultures, faith and nationalities who understand the power of sustainability to create positive change. Arabesque S-Ray™ has been built specifically with Generation S in mind, and can be used as a research tool to inform and empower individuals to make better day-to-day decisions and add more value to society.

We see Arabesque S-Ray™ as an easy-to-use tool to increase transparency in the corporate sustainability landscape. While Arabesque is not an ESG rating provider, we hope that by combining our expertise in quantitative technology and sustainability we can help investors, corporations and all stakeholders obtain a first look into the corporate DNA of thousands of companies.

[1] Kell G, Together, we are generation S, Huffington Post, 2015, http://goo.gl/m46AV4

How can corporations use S-Ray™?

Arabesque S-Ray™ can help companies to obtain a better understanding of their sustainability profile and how they are being publicly perceived. This in turn can serve as important input into strategic decision making at board and executive level.

What is the difference between S-Ray™ and other sustainability scores and rankings?

Arabesque S-Ray™ is constructed as a technology-driven platform for corporate sustainability, bringing together a wealth of different data sources. Rather than uniquely relying on one set of human assessments covering a small sample of large companies, Arabesque S-Ray™ leverages the power of machine learning to systematically combine a diverse set data sources, including analyst-based assessments and publicly available news.

Not unlike other new technologies, we believe that Arabesque S-Ray™ has the potential to keep expanding its reach, as the production and distribution of sustainability data grows. In this process, we warmly welcome constructive input and are happy to engage in research-driven collaboration.

How is Arabesque using S-Ray™ in its investment process?

Arabesque S-Ray™ represents the foundation of the Arabesque investment process. Before we apply our Prime or Systematic strategies, we construct a universe of eligible stocks using Arabesque S-Ray™ scores.

How does Arabesque S-Ray™ assure data quality?

In addition to a number of daily data integrity checks within the Arabesque database, Arabesque S-Ray™ has been developed with data quality as one of the most important objectives. We deliberately combine raw analyst data across multiple rating providers to avoid over-reliance on any one individual human judgement. The automatic calculation of news signals in Arabesque S-Ray™ is designed to avoid any double counting and is followed by at least one round of human review.