Sustainability Reporting
Our Environmental, Social, and corporate Governance (ESG) reporting capabilities encompass the entirety of the EU Regulatory landscape and go a step further in ensuring that the organisation naturally evolves towards more sustainable practices in line with the regulatory objectives for the transition to carbon neutrality by 2050. As more companies make their taxonomy eligibility and alignment reports available reliable sustainability reporting is important as never before.
Taxonomy screening: As financial institutions are expected to provide a more in-depth look at the sustainability of their investments, we offer an easy and automated solution to address all current and upcoming portfolio reporting needs. Get an in-depth look at your portfolio’s Green Asset Ratio (GAR) and Banking Taxonomy Alignment Ratio (BTAR) to better understand your lending activities and their evolution towards climate neutrality.
SFDR (Sustainable Finance Disclosure Regulation): Stay on top of all your reporting obligations and easily integrate and disclose the sustainability risks considered in your investment portfolio. Our automated solutions will provide you with a ready-to-submit Principal Adverse Indicators (PAI) report along with the necessary tools to ensure you keep track of the portfolio’s evolution in tandem with regulatory requirements.
Data Sources and Criteria of ESG Characteristics
The consideration of Environmental, Social, and corporate Governance (ESG) characteristics in selecting potential investments is crucial. We use several methods to collect information and assess nuances about potential investments.
Due Diligence
We use the due diligence questionnaire to identify sustainability risks and provide the ESG scoring, along with good practices, and tools to facilitate assessment regarding any significant issues and opportunities that require a more detailed technical evaluation in setting targets for improvements.
EU Taxonomy
We use the comprehensive tool to assess the EU Taxonomy eligibility and alignment based on technical screening criteria (TSC) including assessments of the ‘Substantial Contribution’, ‘Do No Significant Harm' (DNSH), and the ‘Minimum Social Safeguards’ (MSS).
Data Collection
We collect sector-specific and enterprise-level data, covering the full sustainability spectrum, and analyse it via predefined templates used for financial and non-financial assessment and scenario analysis, as well as further monitoring and reporting.
Assessment of Sustainability Risks
Exposure and materiality of identified social and governance risks are assessed based on the identified improvement areas through a specific engagement process with companies. The proposed environmental/ climate risk assessment methodology is a blend of top-down and bottom-up modelling for transition and physical risks, which is based on three modules:
Scenario analysis: is expected to inform the metrics and targets used to assess and manage climate-related risks and opportunities.
Strategic impact assessment: top-down impact assessment extrapolates the macro-level scenarios to sectors, regions, or asset classes that are homogenous in their sensitivity to climate risks and assesses how it affects different risk factor pathways.
Investee-level calibration: the bottom-up approach calibration captures project-specific nuances.
Use of Metrics for Sustainability Risks
A qualitative approach through engagement and dialogue with the investee can be chosen to manage social and governance risks. Hence, the use of specific metrics is considered optional. We divide climate-related metrics into three categories: strategic, tactical, and operational.
• Taxonomy-aligned exposure: assess and then calculate a share of the portfolio that is EU Taxonomy-aligned, showing exposure to green versus brown assets held in the portfolio.
• Carbon footprint: also called “financed emissions” - is calculated in tons of CO2 equivalents per million EUR invested (tCO2e/mEUR), which measures the carbon emissions of the investment and portfolio altogether.
• (Weighted average) Carbon intensity: puts the total GHG emissions in relation to the total share of the revenue. It is expressed in tons of CO2 equivalents per million EUR revenue (tCO2e/mEUR). By introducing revenue, the metric is adjusted for company size and is, therefore, a measure of how carbon-efficient the portfolio is in producing revenue.
• Impact metrics: assess the extent to which investment actions have made positive climate-related outcomes. Examples of such metrics include avoided or reduced GHG emissions and improvements in energy and water consumption, and waste.
• Climate scenario analysis: based “carbon budget” idea (i.e. the number of emissions that can be safely emitted until 2050 to stay below a certain threshold of global warming), that can be allocated to sectors and companies. Based on these assumptions and other reported company-specific data, it is evaluated whether a portfolio’s future emission path is in line with the emission reduction path of the Paris agreement.
• Scope 1, 2, and 3 GHG emissions - GHG emissions should be calculated in line with the GHG Protocol methodology to allow aggregation and comparability. Partnership for Carbon Accounting Framework (PCAF) data will be used to compare investment emissions to generally accepted industry-specific GHG emissions range.
• Other metrics – often operational metrics require context-specific or, in other words, an investment-specific approach. Hence, we will set up more operational metrics relevant to individual projects.
Setting Targets
Targets are set on portfolio and investment levels. The former is described in the ‘Sustainability Risk and Risk Appetite’ section. Whereas, on an investment level, after the initial identification and assessment of the sustainability-related risk indicators, targets are set up to manage and improve identified conditions. Project-specific targets are defined for relevant metrics & thresholds and Do No Significant Harm (DNSH) criteria and other benchmarks. Key factors will be measured and monitored over the lifetime of the investment.
Monitoring
Monitoring of climate-related risks and metrics is conducted regularly. Data is received from investees in the pre-defined template, used for the following:
• Compare actual results of the metrics against the targets and/or benchmarks and decide on the action plan in case of deviations.
• Aggregate results to the portfolio level and compare the portfolio(s) to the relevant benchmark(s).
• Develop regular reporting to the GND Management and Partners.
Code of Business Conduct and Ethics
The Code of business conduct and ethics is a statement of GND commitment to integrity and the highest ethical standards. The Code defines the standards of conduct that we expect from all of our employees and guides us to make the right decisions when performing our jobs. Every employee is responsible for understanding and abiding by the Code. The Code, and our culture, which is grounded in GND core values, guide all of our actions.
Contacts
For all inquiries please reach our Client service team or contact one of our experts directly.
Value Creation Throughout Investment Cycle
Compliance Guidelines and Policies
We at GND are firmly committed to the highest professional and ethical standards in compliance with local and international laws and regulations. We participate in international efforts to combat financial crime and create a positive impact on the global environment and local communities.
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