Trucost

Our Methodology

Trucost has developed a comprehensive approach to calculating environmental impacts across operations, supply chains and investment portfolios

At the heart of the process is Trucost's advanced environmental profiling model which accounts for 464 industries worldwide and tracks over 100 environmental impacts. The model also examines the interactions and cash flows between sectors in order to map each sector's supply chain. 

With the help of our international academic advisory panel, Trucost has built an environmental profile for each of the 464 sectors. These profiles quantify the environmental impacts associated with a sector, based on the nature of its business activities. 

This data model is the foundation for the assessment that Trucost does of an organisation's environmental impacts.

Here is how the process works. 

1. Analyse company data

Trucost initially analyses financial information from sources such as FactSet or Dun & Bradstreet to establish the business activities of an organisation and then apportions its revenues to those activities.

2. Map company data

Using this information, our environmental profiling model can calculate an organisation's direct and supply chain environmental impacts.

3. Incorporated reported data

At this point, things get really interesting. Trucost enhances its data model by incorporating reported environmental data obtained from public sources such as annual reports and websites. Where environmental reporting is not available, Trucost draws on sources of proxy information such as fuel use or expenditure data, which can be converted into emissions data. Our analysts standardise reported figures to ensure that the data covers the total operations of a company and that the impacts are categorised according to acknowledged reporting standards.

Each analysed company is then invited to verify or refine the environmental profile Trucost has created. Trucost analysts validate and authenticate any amendments or further disclosures made by the company. These additional disclosures are exclusive to Trucost and further augment our data.

4. Prioritise environmental impacts

Once the environmental impacts have been calculated and a full understanding of the organisation has been acquired, Trucost generates reports on an organisation's impacts and assesses which areas need to be prioritised to reduce impacts.

Quantifying environmental impacts in financial terms 

Trucost also converts quantity data into financial values. The price applied to each impact is formulated by our academic panel and derived from environmental economics literature. The price reflects the damage each environmental impact causes and the consequential costs borne by society. This standardised, quantitative and complete data can then be used to assess risks, opportunities and relative environmental performance against peers and across sectors.

 

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