1. RESILIENCE SCORING
We have not not relied on external ESG scores and ratings for our investments. Instead, we created our own “Resilience Framework” and scores to evaluate our investments (listed companies) sustainability journey, targets and delivery. This Resilience Framework can be applied to different investments regardless of asset class.
There are three broad objectives of the framework and score
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The resilience analysis done within this framework becomes the basis of engagement with investee companies.
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Help us understand where a investment is in terms of its sustainability journey.
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Over time we expect to see the data points within the framework start showing causation between investee company’s initiatives and financial performance.
The resilience framework is unique because:
- It was constructed by experienced institutional Investors with a sustainability background.
- It is a multi-year analysis and independent of external ESG ratings and scores.
- It sets out a dynamic and iterative company research methodology, with the resulting analysis the basis of ongoing engagement with portfolio companies and candidates.
- It is backed by detailed engagement with the company's sustainability teams with feedback into the framework improving its robustness.
Panarchy resilience framework differs from other ESG scoring systems because:
- The majority of 3rd party frameworks evaluate ESG factors through a “cost” or “risk” lens. Our framework does this as well, but also accounts for the opportunities that come with an improving resilience profile.
- Moreover, we assess this resilience profile within a context of four distinct forms of capital, rather than an increasingly wide-ranging and unwieldy concept of ESG writ large, which can mean different things to different stakeholders.
- Most ESG frameworks have a stationary point in time view of a firm. Our resilience framework looks at a firm over a period of time and its place and momentum in its resiliency journey.
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EDENRED CASE STUDY
2. OUR THREE YEAR IMPACT REPORT
This comprehensive document offers insights for investors to evaluate the Global Panvest Fund’s progress in pursuing positive human, social, and environmental capital impacts.
Over a three-year period, the report meticulously details our non-financial sustainability performance, highlighting key performance indicators such as greenhouse gas emissions, water management, diversity, governance, human rights, supply chain sustainability assessments, and alignment with the Sustainable Development Goals (SDGs), among others.
This team-wide collaboration also delves into our Panvesting philosophy and Stewardship, along with our Engagement Strategy, providing transparency on potential risks and opportunities. Through this detailed reporting, Panarchy Partners reaffirms its belief in sustainable and responsible investment practices.
3. PORTFOLIO SUSTAINABILITY DISCLOSURES
Panarchy’s Portfolio Sustainability Disclosure illustrates some of the portfolio sustainability characteristics the team tracks on an annual basis whenever the companies release their disclosures. As many are aware, environmental metrics although not perfect, are the most developed so far and the Panarchy team has taken into consideration industry best practices and standard reporting metrics such as the Weighted Average Carbon Intensity (WACI) as recommended by the Taskforce on Climate Related Financial Disclosures (TCFD). In terms of human and social metrics, we believe that quantitative metrics still lack consistencies across the board but think that they will undergo the same progression as environmental metrics as more companies get a better grasp on which human and social metrics matter most to them.
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4. PORTFOLIO CLIMATE GUARDRAILS
Panarchy Global Panvest Fund investments were Purpose-driven companies across multiple industries around the globe. In addition to delivering robust financial returns, the portfolio aimed for progress, on three additional forms of capital that we believe will determine investment outcomes over time: human, social and environmental. In the context of the latter, our strategy adopted a climate-conscious approach, which embeds investment guardrails that we called our portfolio climate C.U.R.E.S. or goals.
This methodology helped us target investments that could deliver strong financial outcomes for our clients while also taking into account the just transition towards a low-carbon economy. Our proprietary in-house assessments not only evaluated actions that companies were implementing for environmental impact, but also drove our active engagement with management teams seeking to achieve best-in-class climate performance.
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5. ASIAN GIGATON FUND
Panarchy Partners is proud to have engineered the Asian Gigaton Fund (AGF), a first of its kind, Asia Pacific listed equities climate impact portfolio. AGF was created with the aim to achieve through its investee companies, greater than 1 Bn tonnes of CO2e cumulative savings compared to 2022 within the next decade. Additionally, the Fund targeted an average absolute reduction of 40% for Scope 1&2 and 30% for Scope 3 emissions from its investee companies.
Here we attach various documents that can help investors recreate a similar strategy with drafts of our OPIM disclosure and details of our Theory of Change (TOC) behind the impact strategy.
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6. ASIAN GIGATON FUND CARBON IMPACT AND EFFORT DATABASES
Using the public CDP disclosures provided by the companies, the Panarchy team created a non-exhaustive database of companies in APAC that can have potential to create impact if they decarbonize while also showing effort to do so. When analysing a company’s potential impact, some factors considered include identification of carbon accounting in the 3 different scopes and carbon intensity. For effort, factors considered include measurement of GHG emission targets and their progress, whether there is environmental linked remuneration in the higher levels of management and placing a price on carbon. This impact and effort analysis serves as an important intermediary step that would rank each company based on their impact and effort scoring.
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Link to the video on climate opportunities from our CDP deep dive:
7. GIGATON COALITION
Investors have enough climate initiatives for their investee firms to deliver on. What is missing is the How! The Gigaton Coalition, a unique Investor-Investee led Climate Solution Platform, which aims to become that How. By identifying tried-and-tested, practical and financially feasible solutions, the Coalition will enable investors to contribute more directly to their portfolio companies’ decarbonization efforts.
As a platform in canvassing and matching practical, financially feasible and tested solutions to decarbonization challenges for firms, GC was envisaged to allow investors to contribute to their portfolio’s decarbonization efforts and thus satisfy the challenge of contribution and additionality as impact investors.
Here we attach various documents that can help climate stakeholders recreate the Gigaton Secretariat, along with some tools and frameworks that can be used.
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