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NEC, the ultimate metric for our planet

Our Experts

Having to adapt to climate change is already a reality for entire population and for corporations. To take action, Sycomore AM has implemented the “Net Environmental Contribution” (NEC), a new advanced metric to measure the strategic alignment of a given business with the energy and environmental transition. Introduction by Jean-Guillaume Péladan, Head of Environmental Investments and Research.

Jean-Guillaume Péladan

Natural capital, at the very foundation of resilience

There can be no prosperous human activity without stable ecosystems able to provide the ‘services’ that keep mankind alive day to day. These services, recorded globally by the Millenium Ecosystem Assessment in 2005, go from pollination by bees to the water cycle, through climate stability.

In the absence of natural capital, there just is no human capital, no societal capital and even less financial capital. And those who believe, through naivety or laziness, that technology will be our saviour, are increasingly less credible in view of the sheer size and number of challenges we would face if the services currently rendered by the Earth’s ecosystems had to be provided artificially. Yes, there is no doubt that without natural capital, neither life – nor its sub-products, which include human civilisations – would be possible. By its very structure, it is the foundation of resilience.

By its very structure, natural capital is the foundation of resilience

A painful deadlock for the traditional economy

However, this remains an “inconvenient truth”, as this now clearly documented and highly evident observation has not yet penetrated the spheres of economic models, which continue to provide seemingly forecasts to a tired audience. Theory had seemingly locked the debate, as this striking excerpt from Jean-Baptiste Say’s 1928 “Complete course in practical economic policy” confirms: “Natural resources are inexhaustible; as otherwise, we would not get them for free. As they cannot be multiplied, or exhausted, they cannot come under the scope of economic science”. So basically, move along, nothing here.

On the climate front

The news on the climate front is bad. Extreme weather events are intensifying; hottest year records are beaten more and more frequently, and global warming estimates are suggesting a rise in temperature ranging between +3 and +6°C in 2100, which would cause sea levels to rise by 2 metres and create hundreds of millions of climate-related refugees. This observation was recently summarised by Gaël Giraud, Chief Economist of the Agence Française de Développement: “It is almost too late to avoid major global warming at the end of the century”, “the poorest populations will be the most exposed to the consequences and this has already begun, particularly in Eastern Africa and in many islands”. Having to adapt to climate change is already a reality for entire populations and for corporations.

A question of survival for all

With all due respect to Jean-Baptiste Say, the mediatised polar bear sadly clinging to what’s left of drifting pack ice is not alone in facing extinction. Many economic species have started to sing the first notes of their “swan song”, including companies active in coal, lignite, oil sands, shale oil or even paper industries. And the next set of candidates for extinction is lining up: intensive cattle farming, monocrop agriculture, nuclear energy, pesticides, endocrine disruptors… It is generally accepted within the economic world that you have to adapt to survive, anticipate to win, etc. And the millions of companies that have already begun their transition are perfectly aware of the reasons behind the deep transformational changes affecting their industries, notably car manufacturers and electric power or heat generation players. Toyota finalised its hybrid Prius in the 90s; Valeo made the shift towards electric control systems for vehicles in the 2000s; paper company UPM Kymmene launched its transformation plan in 2006 and Renault started marketing its first electric cars in 2011, they year the car sharing start-up changed its name to Blablacar…


Our solution for action and accountability


The NECis the result of two and a half years’ work with a growing number of partners - a new advanced metric that enables us to measure the strategic alignment of a given business with the energy and environmental transition. Using physical data, the methodology effectively photographs the net environmental contribution of a business and can be aggregated at the company, portfolio or index levels. The NEC is measured on a scale of -100% to +100%, the middle of the scale indicating the average offer available worldwide on each function that is covered by the research. This new methodology enables us to deliver performance-driven and active fund management as well as a positive environmental impact, as demonstrated by the Sycomore Eco Solutions fund. We can also produce environmental impact reporting perfectly aligned with the principles of article 173 of French Law governing Energy Transition for Green Growth.

Download the full Responsible Way #7 dedicated to the NEC in pdf

This publication is not intended to be an offer or solicitation for the purchase or sale of any financial instrument whatsoever. References to specific securities and issuers are for the purpose of illustration only and should not be construed as a recommendation to buy or sell these values. Communication promotional in nature. This communication has not been prepared in accordance with regulations to promote the independence of financial analysis. SYCOMORE Asset Management or management companies involved with the preparation of this document are not subject to the ban on conducting transactions on the instruments mentioned by the publication of this communication.

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