Collecting ESG data from your SME portfolio to identify opportunities while integrating your own ESG requirements in a seamless way
Inbonis’ ESG digital app enables the identification of main ESG risks and opportunities estimating how they translate into credit risk and needs for the whole SME portfolioNowadays, assessment of ESG risks, impacts and opportunities is the key transformational force in financial markets. Allocation of financial resources towards companies and projects that manage ESG risks is key for people & planet. All banks and financial institutions must comply with sustainability regulation, but only those that are able to fill in the data gap fast will thrive. Currently, sustainable disclosures only apply to large corporates, creating a virtual vacuum for SMEs.
Nevertheless, as corporations must collect and disclose sustainable data from their supply chain in 2024, SMEs need to structure their ESG relevant information to remain in business.
As an ESMA-registered Credit Agency Rating for SME, Inbonis Rating has empirically proven that best-in-class SMEs at managing ESG risk have better credit quality. In order to fulfill our corporate purpose of facilitating SME access to better finance Inbonis Rating has developed an ESG digital tool that enables European Banks and financial institutions to:
- Engage with SME clients by helping them to understand main climate & ESG risks, assess level of maturity at managing them and measure how ESG risks affects their credit risk.
- Estimate SME portfolio transition needs and ESG financing opportunities embedded.
- Ease compliance with sustainability requirements and access to a unique database and proxies.
MAIN FEATURES
USER JOURNEY
Unique and seamless process
adapted to each company
Methodology
Developed and calibrated
with +600 rated SMEs
0. Company identification
Company ID.
Comparison with peers.
0. Company identification
Automatic access to financial and business information of thousands of companies to create engagement.
1. Relevant ESG risks
Material risks based on sector of activity.
Companies can select entity-specific risks when relevant to their activity.
Sector-specific questionnaire.
- 30-45 questions to assess the maturity level of the company understanding and managing ESG risks and its impacts.
1. Maturity of ESG practices
Identification of the main risks associated derived from a sectorial materiality map built and validated by INBONIS using European Sustainability Reporting Standards’ topics and recognized frameworks* as a basis for identification and categorization of sustainability matters.
Libraries of quantitative and qualitative questions -both sector-agnostic and sector-specific- in accordance with European legislation (CSRD/ESRS, SFDR (PAIs), Pillar 3) and other ESG standards (i.e.: SASB).
* A comprehensive sectorial materiality map ranking sustainability topics across 20+ industries based on recognised frameworks e.g.. SASB, GRI, WEF, MSCI and S&P adjusted to the sustainability context i.e. available data in the European region. The grading of each sustainability topic is given by INBONIS with a twofold approach: (i) impact of industry activities on the environment and affected stakeholders (inside-out) and (ii) the financial risks on the industry derived from sustainability matters (outside-in). The activities comprehended in each industry grouping were further categorised into NACE codes to enable equivalence with the Taxonomy delegated act. INBONIS conducted the validation of the map through an analysis of CapEx for each industry which found a very high correlation with the high-impact industries denoting a significant margin for improvement.
2. Materiality matrix
High level of exposure to ESG risks and low maturity in its management indicates urgency and necessity of higher management practices.
2. Materiality matrix
Matrix plots each identified relevant risk according to conjunction of:
- Level of risk exposure according to the sectorial materiality map.
- Company maturity managing such ESG risk from the previous questionnaire.
3. ESG score
Based on residual (unmanaged) risk and weighted according to the importance of each topic.
3. ESG score
The score represents units of managed ESG risk. The score is converted into a 100 points scale. A global ESG score and individual E, S and G scores are provided.
Companies with the highest grades are those assessed as best managing their exposures to those material ESG risks and opportunities.
Individual company scores are compared with the sector benchmark, providing a relative performance expressed in percentile vs. best-in-class.
4. Financial impact
Connection of ESG exposure and risk-management to financial and economic performance in the short/medium term, to create awareness of the urgency to manage ESG risks.
4. Financial impact
Financial materiality of not managing ESG risks is quantified using INBONIS proprietary data (dataset of +70.000 highly predictive qualitative data points generated through the credit rating of +1.000 SME and midcaps) and Natural Language Processing (NLP) models, a subset of Artificial Intelligence (AI).
INBONIS has empirically demonstrated documented correlation between business/financial performance and ESG behavior on its large sample of rated companies.
5. Management tips & roadmap
- Main tips and levers according to exposure/maturity.
- Definition of achievable improvement by topic and trajectories linked to sustainable financing.
- ESG performance tracked over time.
- Compliant reports (DNSH).
5. Management tips & roadmap
Library of more than 300 recommendations associated with the various risks to activate the levers for improving the ESG performance, based on best practices and regulation requirements or recommendations.
An action plan is defined in a roadmap tailored to each company, taking into account its specificities i.e. the level of maturity, number of employees, turnover etc..
Key advantages of INBONIS ESG app for the bank and for its SME clients
For the bank
- Business: early identification of SME ESG needs and sustainability financing opportunities.
- Brand: positioning as trusted bank providing ESG education to SME/midcaps.
- Strategy: awareness of ESG risk relevance (in correlation with credit risk) and enhancement of data lake with sustainable relevant SME data.
- Regulators: proactivity at integrating ESG factors in credit risk to provide overall SME portfolio assessment. Be prepared for stress tests by ECB.
- Compliance: bank’s own ESG risk and disclosure obligations (Transitional advance on documentation and due diligence: sophisticated self-validation and acknowledge standard templates).
For SMEs and midcaps users
- Understand the ESG risks to which they are exposed.
- Estimate the business and financial impact of not managing such ESG risks.
- Define a roadmap and identify best practices, prioritizing the ESG investment needed to improve rating.
- Provide the sustainability data required by their financial/commercial partners.
- Access to new sustainability-linked finance products.
- Compliance with their supply chain disclosure requirements.
- Declaration of DNSH and risk acknowledge.
Business model
- Deployment through license with a third party, who offers the solution to its clients/suppliers (users).
- Software deployment and customization to client needs.
- Annual license & variable cost based on use.
- Ability to promote to app users a service of individual ESG rating involving assessment Inbonis’ rating analysts.
About Inbonis
Pioneer
INBONIS is the first Credit Rating Agency for SME and midcaps registered and supervised by the European Securities and Markets Authority (ESMA). INBONIS has developed a proven SME-specific credit rating methodology and has a unique value proposition in terms of agility and affordability for companies with revenues between 5 and 500 M EUR across Europe.
Leader
INBONIS is the #1 Credit Rating Agency in its current markets (France and Spain), with 56% of new credit ratings of corporates issued in 2022.
ESG embedded
Inbonis has empirically proven that best-in-class SMEs at managing ESG risks have better credit quality.
Purpose & Impact
We seek to improve SMEs access to long-term financing by facilitating their relationship with financial markets offering corporate credit ratings to +200,000 medium-sized companies in Europe.
