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ESG & Sustainability

Montecristo Time cares about sustainability
Montecristo Time promotes environmental and social characteristics ("light green investments" as defined in Article 8 of the SFDR) and does aim for sustainable investments ("dark green investments" as defined in Article 9 of the SFFR). The underlying investments of Montecristo Time do take into account the EU criteria for environmentally sustainable economic activities. Montecristo Time uses the globally approved index Sustainalytics, and invests in companies that have a minimum of a "Medium Risk" rating. Companies that fall below this threshold are excluded from investment consideration.
If you want to know more about Sustainalytics, please click here.

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Sustainalytics

1. What Sustainalytics Is

Sustainalytics is a global ESG research, ratings, and data provider, owned by Morningstar since 2020.

It evaluates how well companies manage material Environmental, Social, and Governance (ESG) risks.

It is used by:

  • Asset managers & hedge funds
  • Pension funds
  • Banks & insurers
  • Regulators & ESG-compliant funds
  • Index providers (MSCI, Morningstar, etc.)

2. What the Sustainalytics Score Exactly Measures

It measures how much unmanaged ESG risk remains.

It answers this question: How exposed is the company to financially material ESG risks, and how well are those risks managed?

So it is a risk metric for financial downside, not a moral score.

3. How the Rating is Calculated

The score is built in 3 layers:

a) ESG Risk Exposure

How exposed the company is to:

  • Climate & emissions
  • Labor & human rights
  • Data security
  • Product safety
  • Corruption
  • Supply-chain risk
  • Board structure, etc.

This depends heavily on industry, geography, and business model.

b) ESG Risk Management

How well the company:

  • Has policies
  • Applies controls
  • Reports transparently
  • Has audits & governance systems

c) Unmanaged Risk = Final Score

What is left after management efforts. This final number is the Sustainalytics ESG Risk Rating.

4. Sustainalytics Risk Score Scale

Score Risk Level
0 – 10 Negligible risk
10 – 20 Low risk
20 – 30 Medium risk
30 – 40 High risk
40+ Severe risk

Lower score = better (less unmanaged ESG risk)
Higher score = worse (more ESG risk still unmanaged)

Examples:

  • Microsoft ≈ 14 → Low Risk
  • Shell ≈ 35–40 → High Risk
  • Tesla has fluctuated between Medium and High in recent years

5. How Sustainalytics Is Used in Practice

It is used for:

  • ESG fund screening
  • Regulatory compliance (SFDR in EU)
  • Portfolio risk control
  • Green bonds & sustainability-linked loans
  • Bank credit pricing
  • Institutional mandates ("only low-risk ESG stocks allowed")

In Europe it is directly tied to SFDR Article 8 and Article 9 classification.