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Four Twenty Seven

Service Providers Framework 2020

You are in Research and Data Provision » Research/process level

Research/process level

RDP 02. Sources for research and/or rating

02.1. Indicate the types of sources you use for research and/or ratings of companies/sectors/geographies or similar. Tick all that apply.

          Climate data from the IPCC (CIMP5)
        
          Other environmental risk and scientific data sources on flood, sea level rise, water scarcity, etc.
        

02.2. Indicate how ESG factors are incorporated into your research and/or rating methodology

02.3. Describe how you define materiality and how this is captured in your research and/or rating methodology as well as final product.

          Four Twenty Seven uses the definition of financial materiality from the US Securities and Exchange Commission. We believe, in accordance with the Task Force on Climate-Related Financial Disclosure (TCFD), that the physical impacts from climate change are and will increasingly have serious material financial implications. In assisting our clients in quantifying the physical risk in their portfolios or supply chains, our risk scoring tool will help investors and corporations more clearly define the materiality of the physical impacts of climate change for their operations.
        

02.4. Additional information. [OPTIONAL]


RDP 03. Stakeholder input

03.1. Describe how you actively include input and information, wherever possible, from relevant stakeholders or interested parties, in the research process or in reaching assessment conclusions.

          We provide independent research and do not include feedback from stakeholders and interested parties.
        

03.2. Additional information. [OPTIONAL]


RDP 04. Up-to-date assessment and ratings

04.1. Indicate how you ensure that your ESG assessment of companies/ sectors/ geographies or similar is up-to-date and that new information is incorporated or new assessments are conducted at reasonable intervals.

04.2. Additional information. [OPTIONAL]

We monitor developments in climate science to ensure we include the latest peer-reviewed research and data on physical impacts of climate change.


RDP 05. Balanced research and assessment

05.1. Indicate how you typically ensure a balanced approach to your research methodology and assessing/rating of companies/sectors/geographies or similar. Tick all that apply and explain your approach to each option.

Type of indicators

Explain your approach

          For our country and equity risk ratings, Four Twenty Seven assesses geographies and companies of various income classes and size using common criteria. We also incorporate an equal number of social, economic, and environmental factors to the extent that these factors are affected by or relate to climate change.
        
          Balancing risk in operations vs. upstream and downstream
        

Explain your approach

          We provide a score for exposure to physical risk for supply chain and markets to supplement our analysis of exposure in operations (asset-level) for corporations.
        

05.2. Additional information. [OPTIONAL]

Four Twenty Seven’s equity risk scoring methodology is data-driven and leverages a robust data set of indicators that enables comparability across company sectors and geographies.

Our scoring tool is in continuous development, and as our resources allow, we are actively exploring ways to integrate indicators that balance process and performance indicators and references to past and current performance.


RDP 06. Consistency and comparability

06.1. Describe the control processes in place to ensure quality of research.

          Our data quality processes vary depending on the source of the data and the level of quality assurance done prior to that source entering into our possession. The climate data has been vetted by rigorous review processes in the scientific community before being made available for use, and we have high confidence in the quality of that data under the standard parameters of our analysis. Our methods for applying this climate data to specific locations is also vetted by a team of expert advisors. We acknowledge a level of uncertainty exists in both the climate model projections and the assumptions we take about non-linear business impacts. We have applied strict statistical validation methods to account for model uncertainties and to ensure a practicable level of directional accuracy in these estimates.

Other data sources, such as company asset-level data, come from third party sources with some level of quality control, but not necessarily at the level of rigor needed for the type of analysis we perform. These sources require us to apply more direct quality control measures. We do this through desktop research, focusing in detail on the largest drivers of results and performing spot checks on the other components to identify any systematic errors. If we encounter issues with data quality in the source data, our preference is to use alternate sources, or failing that, downgrade the weighting of that data source. 

Finally, we employ quality assurance and control procedures throughout our analysis. Quality checks occur prior to and following the transformation of data by individuals with designated QA/ QC responsibilities. These quality assurance procedures enable us to find and correct a number of errors and inconsistencies in the data, resulting in a more robust data set. However, some limitations continue to apply. We attempt to be as transparent as possible about these limitations when communicating with clients.
        

06.2. Additional information. [OPTIONAL]


RDP 07. Emerging ESG issues and trends (Private)


RDP 08. Client use of outputs (Private)


RDP 09.


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