In the previous article , we talked about various initiatives in which modefinance participates, thus contributing to the creation of a more sustainable society. Among these, we find the TranspAeEEnS project, the RIBES project, the path taken towards SMEs’ support in minibond emission and the creation of a model for the sustainability of an enterprise’s activity assessment, that is a proprietary ESG rating.
Sustainability according to modefinance
Measuring sustainability is no longer a trend of the moment. Having environmental, social and governance data has become a necessity for survival in a highly competitive economic and financial world. However, what represents a great challenge for anyone who deals with financial evaluations is the complexity of ESG factors measurement and classification. That is why modefinance stands out in a still new, but necessary world.
modefinance’s ESG rating service provides a sustainability performances assessment through the collection of environmental, social and governance data. Our proprietary modeling services are founded on Artificial Intelligence and Machine Learning principles, they are based on two strands – the statistical one (quantitative) and the one based on the analysts’ research (qualitative) – and they conduct to the ESG performance analysis of the subject compared to key sustainability indictors.
It is from this approach that our Exposure vs. Management vision takes its cue. According to this attitude, a company is evaluated conforming to its level of awareness of the risks faced by its activity and, consequently, according to active policies that it establishes for the issues and dangerous circumstances management.
Once assessed risk management and the company’s results indicators, our clients are provided with a report that delivers an ESG rating of the subject taken under analysis placed on a proprietary scale composed of 7 rating classes (from S1 to S7, from the best to the worst rating), thus defining the enterprise as dynamic, aware or fragile.
Sustainability indicators, universally recognized as KPIs (Key Performance Indicators) are the result of the meticulous research work, collection and selection of our ESG teams. How do we assess the sustainability of a SMEs' activity?
modefinance's perspective of the risk management: the final evaluation of ESG ratings
The gathering of data necessary for the issuing of an assessment has always been a crucial step in order to obtain an accurate and reliable credit rating. Given that we are living in a new era of financial management and that we do not dispose of standardized ways of environmental, social and governance sustainability evaluation, modefinance teams carry out a public data collection work through chamber of commerce certificates, the TranspArEEnS dataset and, eventually, a questionnaire composed of specific questions that help the analysts in the issuing of an accurate final evaluation.
In addition to this, ESG solutions available to our clients are three, in order to better meet the needs of our products and services users:
• ESG module in Tigran Risk Platform: a solution for the digitalization and automation of the creditworthiness assessment process, integrated with an ESG rating evaluation to assess the financial situation and the degree of the counterparty's sustainability
• ESG Core Assessment Report: a synthetic assessment of the ESG situation
• ESG Comprehensive Analysis Rating: an extensive investigation of the three pillars of sustainability that will help our clients understand if a company can incorporate relevant sustainability risks and opportunities into the development framework and strategic planning, within an "exposure vs. management" perspective.
The ESG rating measures the medium- to long-term sustainability, social and environmental impact and sustainable growth opportunities of a given company. In this context, our proprietary ESG evaluations are based on the most advanced AI technologies and on data gathering in order to obtain accurate and reliable results, both financial and social, environmental and governance.
All these features work to make the ESG rating a tool accessible to everyone, in order to allow both large-scale enterprises and SMEs to increase their brand’s value, to improve the relationship with their stakeholders and to cut financing costs, all while making the world we live in more ethical and more sustainable.