ESG Evaluation Methodology for Private Markets Instruments

Nummus.Info has developed an independent ESG evaluation model tailored specifically for Private Market instruments, in collaboration with institutional investors and asset managers.

This model facilitates the integration of ESG analysis into illiquid assets, delivering a comprehensive 360° assessment of investment portfolios.

Tested on more than 400 financial instruments across over 180 investment firms, it sets a benchmark for ESG analysis within the private markets sector.

Evaluation Structure

The methodology is structured around six key areas:

1. Policy and Procedures of the Issuer
   • Verification of the adoption of a sustainability policy.
   • Analysis of the issuer's alignment with international ESG frameworks and standards.
2. Issuer ESG KPI Analysis
   • Evaluation of the issuer’s environmental, social, and governance key performance indicators (KPIs).
3. Procedures, Commitments and Integrations
   • Classification according to SFDR regulation (Art. 6, 8, or 9).
   • Verification of ESG commitments made and strategies integrated into the product.
4. Portfolio ESG Risk Factors
   • Portfolio analysis using an ESG materiality matrix.
   • Evaluation of greenhouse gas (GHG) emissions.
5. SDGs
   • Assessment of alignment with the UN Sustainable Development Goals (SDGs).
6. Monitoring and Reporting
   • Existence of ESG oversight processes.
   • Recording of any ESG incidents or controversies.
   • Request for supporting documentation to ensure transparency in the analysis.

ESG Scoring and Rating

The model assigns a maximum achievable score to each section and integrates both qualitative and quantitative assessments. The qualitative part involves a subjective evaluation by an analyst, focusing on key areas of the model that carry significant weight and require supporting documentation for validation. The quantitative component is based on responses provided by the managers, which are processed by an algorithm to generate a score according to a defined scoring scheme. The model's architecture incorporates interdependencies among elements, enabling it to detect inconsistencies in the managers' responses and reflect them appropriately in the final evaluation.

The final score is converted into an ESG rating, which classifies the financial instrument into one of three levels:

🔴 Low Sustainability– High ESG risk or lack of ESG factor management.

🟠 Medium Sustainability – Adequate ESG management in line with competitors.

🟢 High Sustainability – Excellent ESG management and optimization of sustainable opportunities.

👉 Download the complete document to explore the methodology in detail.