How S-Ray can help

Arabesque S-Ray is an easy-to-use tool that is increasing transparency across the corporate sustainability landscape. We offer a variety of services and bespoke solutions to many of the world’s largest investors, corporations, consultancies and media groups. There are four core types of uses of the technology:

For Investors

S-Ray can empower investors to make better and more informed investment decisions while contributing to a more sustainable future. Clients of S-Ray across the global investment market include State Street, Deutsche Bank, the Government Pension Fund of Japan, AP1 and Eagle Investment Services (BNY Mellon). Four examples of ways investors use S-Ray are as follows:

Companies with a poor GC score face increased reputational risk and the potential loss of their public license to operate. Likewise, low ESG scores indicate inferior performance, thereby allowing investors to take notice before the company is involved in a potential scandal. Through the daily update functions of S-Ray, investors can manage risk in real time, rather than solely depend on annual ESG updates provided by analysts.

Companies underperforming in terms of their ESG score are also less likely to display future financial outperformance. Using data from Arabesque S-Ray, Pensions & Investments found that companies with high ESG scores outperform lower scoring peers. Significant involvement in activities that are not aligned with most investors’ personal values can further hinder companies from attracting capital. Arabesque S-Ray enables more informed long-term investment decisions, aiming to shift capital from the bottom corporate performers to the top.

As ESG becomes increasingly mainstream, policies are being implemented that require institutional investors to disclose their approach to ESG investing. In Sweden for example, institutional investors are now required to disclose their approach to ESG. In the Netherlands, investors without an ESG policy must explain why one is not in place. And in France, in addition to an ESG policy, investors’ contribution to climate goals must also be disclosed. By using S-Ray, investors can ensure that they comply with regulation requiring ESG integration and disclosure, as well objective, quantitative data to allow for clear ESG reporting.

With over 80% of millennials interested in sustainable investing, and an expected $24 trillion USD to be under control by millennials in 2020, demand for ESG products, strategies and integration is likely to continue to grow. In order to harness this growing market, investors using S-Ray can appeal to this demographic. Additionally, by having the data for the varying ESG features, as well as preferences filters, investors can create bespoke ESG portfolios that focus on specific issues.

For Corporates

Arabesque S-Ray can help companies obtain a better understanding of how they are being publicly perceived, and thus gain insights into the effectiveness of their sustainability practices and strategies for brand management and valuation. Our Company Snapshot service allows corporates to systematically manage ESG risks and identify the most material features to improve their S-Ray scores. This in turn can serve as an important input into strategic decision making at board and executive level, whilst also indirectly having a positive impact on other ESG ratings. The following examples shed light on the various ways in which corporates can benefit from S-Ray data:

Our Company Snapshot service allows companies to see where their firm ranks within their sector and industry. By comparing the company’s historic and current ESG and GC scores to its peers, companies benefit from seeing where they outperform and underperform, as well as where competitors stand. The ESG score allows firms to evaluate whether they are positioned to outperform competitors in the long term, and the GC score is used to approximate a company’s reputational risk.

Using a gap analysis, corporates can use S-Ray data to see where they rank highest and lowest in comparison to their sector peers. By differentiating between each sustainability feature, this allows companies to see the break-down of data contributing to the score, thereby providing insight into which features should be focused on improving. For example, should a firm have a low governance score, the Company Snapshot may indicate that the firm has the lowest number of women on the board in its peer group. Also, for each feature, through historical data, a company can assess which practices have the greatest impact on its scores. For example, if a company was in the top percentile for Forensic Accounting – a feature within the Governance score – and this changed to the bottom percentile, the company can see the month in which this shift occurred and identify whether there were changes to its accounting practices that month.

For Media

S-Ray is a rich source of data for corporate news stories and analysis. Journalists around the world are now using S-Ray to spot key trends and analyse data and examine corporate performance. For example, in 2018 the Philadelphia Inquirer ranked Philadelphia-based companies on diversity, governance, and transparency, whilst Fortune explored the ESG performance of S&P 500 companies through the lens of S-Ray. Whether the data is used to shed light on a company scandal or, for example, detail an industry’s improvement in board diversity, the capabilities of S-Ray as a source of corporate information are vast.

For Public Use

Anyone can access and explore S-Ray scores via the free S-Ray web-based platform. S-Ray allows the everyday user to make sense of the huge amount of sustainability information in the marketplace through an aggregated and clear rating of companies. All stakeholders can use the information of S-Ray and feel empowered to support the companies that align with their values, and to push those companies that are under-performing to make necessary changes. Alongside acting as a transparency tool, S-Ray can also be used for research and policy making.

Given the broad integration of ESG into financial education, and the increasing number of sustainability-based degrees, S-Ray is an invaluable tool for academic institutions and universities. Students can learn about the intersection between the private sector and sustainability-related issue through S-Ray and use this information to recognise risks and opportunities in the ESG space. For example, S-Ray could be used for business case studies, in which students make connections between business operations, market trends, and ESG scores.

Policymakers and governing bodies can also make use of S-Ray data in order to make sense of how companies and industries are performing. This allows for the issues that may need additional focus to be highlighted. For example, a governmental energy department may be focusing all its resources on lowering carbon emissions, while the data indicates that the majority of energy companies’ in its region have relatively low carbon emissions for the sector. Rather, their low scores may be caused by a lack of biodiversity policies, thus leading the department to re-valuate the current regulation.

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