Net Zero Analytics has developed a specific methodology to determine the compliance of a company with ESG criteria regardless of its size.
Thorough research of open sources in conjunction with an interview or inspection where applicable, provides our analysts with the necessary understanding of its compliance rate with ESG criteria.
Our team conducts the research based on at least 150 different criteria that correspond to the issues below:
EU Environmental Taxonomy Criteria
Climate Change Mitigation (CCM)
Climate Change Adaptation (CCA)
Pollution Prevention & Control (PPC)
Sustainable use and protection of water
Transition to a circular economy
Protection and restoration of biodiversity
Social Criteria
Human rights, community relations, access & affordability
Customer welfare - fair messaging, privacy & data security
Labour relations & Practices
Employee wellbeing
Exposure to social impacts
Governance Criteria
Management strategy
Governance structure
Group structure
Financial transparency
Methodology
The process consists of eight equally important phases
Our experts have developed a specific methodology to determine the compliance of a company with ESG criteria regardless of its size. We combine thorough research of open-source data with direct stakeholder interviews and the latest analytical tools to produce quantitative and qualitative assessments.
Prepare detailed criteria
Collect open source data
Perform pre-analysis
Interview with management
Perform in depth analysis
Draft report
Ratings committee
Initiate ongoing monitoring
Ratings Process
Net Zero Analytics step-by-step ESG Ratings Process
Our analytical team identifies the key ESG pillars, considering the latest global issues of concern. The team begins its research by identifying the key ESG pillar in which
the most risk is likely. For example, an aviation company consumes fuels that is
harmful to the environment, so we begin our evaluation with a focus on the
environment pillar. At this stage, the company's exposure to external
factors are taken into consideration, since it can affect the risk that corresponds to the
industry.
the most risk is likely. For example, an aviation company consumes fuels that is
harmful to the environment, so we begin our evaluation with a focus on the
environment pillar. At this stage, the company's exposure to external
factors are taken into consideration, since it can affect the risk that corresponds to the
industry.
Net Zero Analysts perform a thorough review of information known to them and believed to be relevant to the analysis and the rating decision in accordance with the applicable criteria such as:
published company financial and operational statistics,
reports filed with regulatory agencies,
industry and economic reports,
other data and insights,
news and Social Media.
Our analysts also consider macroeconomic data, market events and any other information deemed relevant for rating analysis, such as data from a peer, data provided by other analytical groups within publicly available information.
published company financial and operational statistics,
reports filed with regulatory agencies,
industry and economic reports,
other data and insights,
news and Social Media.
Our analysts also consider macroeconomic data, market events and any other information deemed relevant for rating analysis, such as data from a peer, data provided by other analytical groups within publicly available information.
The analytical team conducting the analysis will determine if sufficient information is available to form a view on the ESG compliance of the company. The team will also consider whether there is sufficient information to assign a ESG rating. If we believe that the information available is insufficient to form a rating opinion, no rating will be assigned.
Net Zero Analytics conducts a detailed discussion with the management team to understand the business and convey our initial thoughts. This can be done through face-to-face meetings, site visit and/or teleconference, when appropriate.
The analysis required includes a complete application of sector-specific ESG rating criteria including: assessments of Key Rating Drivers according to applicable master or sector criteria, developing or applying a rating model where applicable,
quantitative and qualitative analysis performed in line with ESG criteria,
positioning our ESG assessment against key peers through an in-depth Benchmark Analysis,.
quantitative and qualitative analysis performed in line with ESG criteria,
positioning our ESG assessment against key peers through an in-depth Benchmark Analysis,.
Once information has been collected and the company analyzed in accordance with Net Zero Analytics criteria and methodologies, the analysts will form a rating recommendation and document their analysis and rationale in a committee package. The committee package must contain sufficient content, consistent with the methodology and criteria that apply to the analysis, to provide a solid basis for the recommended ESG rating. The package includes a summary of key rating drivers, sensitivity analysis, criteria variations (if any), and details of reasonable investigation, amongst certain other minimum content.
The ratings committee considers the information and rating recommendation presented in the committee package, and discusses the recommendation. Voting members are our senior advisors, chosen based on relevant experience, with seniority and experience thresholds reflected in our committee quorum requirements. The committee considers relevant quantitative and qualitative factors, as defined in Net Zero Analytics established criteria and methodologies, to arrive at the ESG rating that most appropriately reflects both current and prospective performance.
Net Zero Analytics ratings are typically monitored on an ongoing basis and the review process is a continuous one. Monitored ESG ratings are also subject to a review by a rating committee, at least once annually.