What is Entelligent Smart Climate® Technology?
Our technology, patented in 2019, is a climate and financial data processing system that estimates the effect of a changing climate and changing global energy production and consumption patterns on public equity performance. Entelligent evaluates a range of scenarios to provide investment strategy guidance on climate change risk.
Smart Climate® uses a 3-step process to derive our E-Score®, a rating system that grades public companies according to their transition risk relative to a peer group.
Entelligent’s Smart Climate® technology is trusted by global leaders in sustainable investment including the United Nation Joint Staff Pension Fund, Societe Generale, FactSet and S-Network.
How does the 3-step process work?
First, Entelligent evaluates multiple climate scenarios with an integrated assessment model. The model simulates energy transitions arising from a range of policy, technology, demographic and economic outlooks.
Second, for each scenario, Entelligent generates price and profitability forecasts for every major energy source (e.g. oil, coal, nuclear, renewables).
Third, Entelligent scores companies based on sensitivity of share-price (or total returns with dividends reinvested) to historical and forecast energy prices using machine learning algorithms. Companies with higher sensitivity to energy volatility are rated as higher risk by the E-Score.
Fundamentally, the E-Score translates future risk to global climate change scenarios into present-day portfolio guidance.
Where does Entelligent get its financial data?
Financial data is sourced from FactSet, a global leader in financial information. Entelligent leverages entity and security-level data including price returns, total returns, revenue, market valuation, GICS industry groups, MSCI region codes, index/fund memberships, and a variety of security identifiers.
Where does Entelligent get its climate data?
Entelligent derives its climate data from an IAM by simulating energy transitions arising from a range of policy, technology, social and economic outlooks.
Multiple future scenarios are evaluated, ranging from unmitigated carbon growth to aggressive climate change mitigation.
Our work began with the Rapid Overview and Decision Support model (En- ROADS; published by Climate Interactive) and is expanding to evaluate multiple IAMs.
How does Entelligent establish climate senarios?
Entelligent’s scenario simulations yield future climate and energy estimates. Scenarios are calibrated to select reference scenarios from the United Nations Intergovernmental Panel on Climate Change (UN-IPCC).
Our strategy combines output from the following climate scenarios:
- Carbon minimum (MIN) impact scenario
- Carbon maximum (MAX) impact scenario
- Business as usual (BAU) carbon impact scenario
Key scenario factors include carbon tax, energy source subsidies, land use change, negative emission technologies, rate of improvement of new capital, electrification of transport, population growth and per-capita GDP, among many others.
Are Entelligent’s E-Score ratings standard or bespoke?
Entelligent issues standard ratings for publicly listed equities across multiple channels, including FactSet. These ratings are based on consensus scenarios developed by our advisory panel of climate scientists. Clients may also request a custom scenario elicitation to align with stakeholder commitments (e.g. Paris compliance) or differing world views (e.g. slower GDP growth, faster adoption of renewables, a higher carbon price). E-Scores that result from custom scenario elicitation will be unique to that client.