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Net Environmental Contribution®: Sycomore AM and partners open-source new multi-issue environmental metric for finance industry

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As urgent calls for action on climate change and environmental protection intensify, the financial sector has begun searching for robust tools to capture environmental risks to better support responsible investment strategies and decision-making. In response to this growing need, Sycomore Asset Management has made the decision to share its proprietary Net Environmental Contribution® (NEC) metric through a collective platform: the NEC initiative.

NEC

The NEC is the result of 3.5 years of R&D conducted with environmental sustainability consultancies, I Care & Consult and Quantis, and with BNP Paribas Securities Services. It measures the extent to which businesses are aligned with the environmental and energy transition and with global warming targets. The outcome is a single figure ranging from -100% to +100% that can be applied to all industries and funding types.

Jean-Guillaume Péladan, portfolio manager and head of Sycomore AM’s environmental strategy, explains the background of the initiative: “Our aim was to provide a simple answer to a complex question: ‘Does this business, company, fund or index contribute to the environmental and energy transition?’ We worked with a body of experts supervised by an independent strategic committee. As the first results were extremely encouraging, we continued our efforts and by 2018 had achieved a coherent system that has already been tested on over 1,300 stocks and bonds”.

Our aim was to provide a simple answer to a complex question: ‘Does this business, company, fund or index contribute to the environmental and energy transition?’

Guillaume Neveux, CEO of I Care & Consult, comments: “Since 2015, our clients’ interest in the NEC has grown considerably and we have applied this indicator across different asset classes: listed companies, private equity, infrastructure and real estate. Investors are interested in the wide-ranging nature of its sector applications, its ability to integrate the full range of environmental issues relevant to specific industries, and its discriminatory power. We firmly believe that the NEC Initiative will attract a large number of financial players keen to join us in developing this new standard”.

Emmanuelle Aoustin, CEO of Quantis adds: “The development of robust, multi-indicator environmental metrics for evaluating financial assets is a major step forward that will serve as a driving force for our ecological transition. As one of the co-founders and the organizer of the NEC initiative, Quantis is proud to bring to the platform its expertise in environmental metrics and experience in co-founding several recognized pre-competitive initiatives. Together, we will accelerate the alignment of investments with a sustainable economic model.”

Christine Kolb, partner and founder of Sycomore AM, points out that this disruptive initiative is a step towards achieving “finance with a purpose,” keeping with Sycomore AM’s mission statement: “The NEC began in 2015 with the launch of the Sycomore Eco Solutions fund. Since then, the NEC has become our compass as we navigate the environmental and energy transition and now covers all of our investments. In 2018, we believe that the NEC will be of greater use to our stakeholders and have a broader impact, particularly with our clients, if we move into an open-source system, sharing with an engaged and collaborative group”.

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

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