The Yieldrive Methodology
There’s much more to investing than just crunching financial numbers. Sure, financial reports reflect the quality of a company to a large extent, but are mostly focused on the past. On the other hand, quality of human processes in an organization, exposure to environmental risks, strength of governance and focus on employee’s professional growth etc. impact future growth and tell us much more about the long term prospects of a company.
To analyze companies in-depth, Yieldrive first employs its proprietary NLP (natural language processing) AI to extract relevant ESG and performance data from regulatory filings, sustainability reports and reputable new sources. Finally, the same AI assesses the relevance and sentiment of each piece of information, thus generating scores for each indicator as well as total scores for E, S and G.
Next, the Yieldrive ESG scores are merged with 23 ratios which reflect companies’ operating efficiency, solvency, profitability and shareholder value creation. Companies are also benchmarked against relevant peers in the same industry.
The final result of this proprietary method is a Yieldrive Total Score for each company in which ESG and financial performances are balanced out 50/50, thus revealing whether ESG is supporting companies’ financial performances.
How does this methodology work for the investors?
This Total Yieldrive Scores, however, should not be taken at face value but rather be utilized as an indicator where to direct your further research and how to structure your analysis. Yieldrive provides the tools for this advanced analysis and deeper research that starts with the Total Yieldrive Scores and then goes to the next layer of detail where the separate scores, namely Environmental, Social, Governance and Financial, reflect how the company fares in the respective areas.