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. The actual underlying set of data sources is proprietary. This set also changes over time and differs between companies based on information identified by the algorithms. However, Arabesque S-Ray™ organizes all data in two main groups.
- 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 consensus 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.
- 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 are used in the construction of both scores for each company.
For the Preferences Filter, Arabesque S-Ray™ 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 better understanding a company’s potential for future financial outperformance and therefore calibrated to improve risk-adjusted investment returns. To achieve this objective, the ESG Score applies an industry lens and only considers those sustainability criteria which have a significantly higher likelihood of correctly predicting future financial performance. Together, the GC Score and ESG Score provide a powerful and holistic understanding of a company’s sustainability profile.
Note that this also means that a company’s environment sub-scores of the GC and ESG score will not be identical. Environmental performance under the GC score reflects the environmental principles of the UN Global Compact. As part of the ESG score, the environment sub-score is calculated on an industry-adjusted basis and only from those environmental criteria which are found to have a significant relationship to future financial performance.
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 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.
How can I use S-Ray™?
At Arabesque, we believe in Generation S, 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.
How can corporations use S-Ray™?
Arabesque S-Ray™ can help companies to obtain a better understanding of how they are being publicly perceived and thus gain insights on the effectiveness of their sustainability practices and strategies for brand management and valuation. 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?
We believe Arabesque S-Ray™ is different from other sustainability scores in three ways:
- Being an asset manager, rather than an ESG data provider, Arabesque S-Ray™ has been specifically calibrated to help improve investment decisions and risk-adjusted returns.
- Arabesque S-Ray™ is a technology-driven platform that leverages the power of machine learning to systematically combine a diverse set of data sources, rather than relying on one set of human judgements. The algorithms driving Arabesque S-Ray™ are designed to learn over time as new and different types of data sources become available.
- To reflect the multi-faceted nature of corporate sustainability, Arabesque S-Ray™ provides three distinct sustainability measurements, instead of one simple total score. The GC score primarily looks at how a company behaves in relation to the UN Global Compact principles. The ESG score provides information on a company’s ability to financially outperform in the long run. The Preferences Filter allows users to find out if companies align with their personal values.
How is Arabesque using S-Ray™ in its investment process?
How does Arabesque S-Ray™ assure data quality?
Arabesque S-Ray™ has been developed with data quality as one of its most important objectives. As a quantitative asset manager, Arabesque has built a proprietary data fingerprint technology, which helps overcome data integrity issues when combining different sustainability data sources. The combination of raw analyst data across multiple rating providers also helps avoid over-reliance on any one individual human judgement. The automatic calculation of news signals in Arabesque S-Ray™ further augments analyst views and is designed to avoid double counting.
Can I access more detailed scores to understand a company’s performance?
In the public (and free) version of Arabesque S-Ray™, we only provide total GC and ESG scores. Subscribers to S-Ray™ Pro or Enterprise can further access four GC sub-scores (i.e. human rights, labour rights, environment and anti-corruption) and three ESG sub-scores (i.e. environment, social and governance). Beyond this, we do not disclose further details on companies’ performance.
What companies are included in S-Ray™?
Arabesque S-Ray™ currently only covers publicly listed companies, as these are typically better covered by both analysts and public media. Owing to the strict data quality assurance process, Arabesque S-Ray™ also only provides information for companies which have a complete set of available sub-score. For example, a company with too little data available on human rights performance will not be displayed, despite available scores for other criteria. Over time, as we expect data quality to keep improving, Arabesque S-Ray™ will cover an increasing amount of companies.
What are the technical requirements to access S-Ray™?
The following technical requirements need to be met to access the full functionality of the online S-Ray™ tool.
- Microsoft Windows 7 or higher
- MacOS 10.11 (El Capitan) or higher
- Microsoft Internet Explorer 11 or higher
- Google Chrome
- Mozilla Firefox
- Apple Safari
- Minimum 1024×768
Currently, S-Ray™ is not available through mobile devices.
More detailed technical requirements are available here.