The process of calculating ESG Impact scores for a portfolio can be broken into the following steps.
Clarity AI’s ESG Impact scores are built bottom-up from the relevant metrics of a portfolio’s constituent securities, as follows:
- Scores of each of the constituents of the portfolio
- The potential impact of a company is calculated from the Company’s performance relative to its industry, the total industry contribution, and the impact conversion rate. Potential impact is ranked and scored against all companies in the Clarity AI universe.
- Company scores are calculated to reflect total potential impact. This means summing the potential of all topics, then ranking and scoring against all companies in the Clarity AI universe.
- Scores are comparable across companies and sectors
- Aggregation of organization scores bottom up to portfolio level
- The portfolio score is the asset-weighted average of the scores of all companies that compose it. This method allows bottom-up calculation of the portfolio score at the metric, topic, or pillar level.