The elegant yet substantial late 19th century building is just about the exact opposite of what a recent start-up might be expected to call home. Located directly across from the botanic gardens in Frankfurt’s diplomatic quarter, it blends in seamlessly with the surrounding consular offices. Step inside, however, and the first sight to unfold is not flags and diplomatic formality but the colourful tableau of Arabesque S-Ray’s developer team working away in a bright and airy office that might perhaps once have been someone’s (large) living room. Some are deep in conversation, a few have paired off to examine a printout and others are poised in front of the screen, headphones on, typing away intently. We carry on up to the first floor, where we have arranged to meet S-Ray CEO Andreas Feiner, Lucie Haß and Philipp Kaiser from Helaba Digital and Stephan Kloock, Head of Helaba’s Credit Risk Management department and one of the functional sponsors of the equity investment.
Stephan Kloock, Head of Credit Risk Management department, Helaba
Arabesque S-Ray specialises in preparing multidimensional corporate sustainability ratings, which are coming to play an ever more important role for investors. “What we are interested in is analysing companies’ sustainability performance comprehensively and making it more of a focal point,” emphasises Andreas Feiner. “S-Ray does this by combining different ratings and criteria and merging them in a company-specific matrix that can be accessed online at any time.”
As well as looking at ESG scores (environmental, social and governance), S-Ray examines the customer’s ethical preferences and calculates a GC Score, which is derived from the UN Global Compact (GC) and indicates how a company conducts itself in the areas of human and workers’ rights, environmental protection and the avoidance of corruption.
The start-up has developed a unique rating all its own – the Temperature Score – and integrated it into S-Ray as well. Based on a company’s CO2 emissions, the temperature score shows at a glance how a company’s activities impact on the climate. “We rate companies on a scale of 1.5 to 3°C in line with the Paris climate objectives to provide easy access to a transparent metric for a large target group,” the CEO explains.
Turning to his partners, Andreas Feiner adds, “The joint development work and two-way knowledge-sharing are obviously important factors in our co-operation and of course in Helaba we have gained not just a partner, but also a big and very interesting customer.” Lucie Haß nods in agreement: “S-Ray is useful for a number of different Helaba units and subsidiaries. Helaba Invest is looking into using it directly, for example, and we have already started discussions with other potential users.”The deceptively simple S-Ray interface conceals a sophisticated system capable of supplying the very latest sustainability ratings at any time. “The algorithm we have developed analyses huge volumes of data automatically in real time from over 30,000 sources: the companies themselves, NGOs and relevant service providers,” reports Andreas Feiner. “We are refining the underlying processes continuously through a combination of machine learning and human controls.”
The start-up’s activities contribute valuable expertise to the co-operative relationship with Helaba in three key areas: big data, sustainability and artificial intelligence. “All three of these domains are vitally important for the future and of great interest to us, so when I heard what S-Ray was up to, I knew straight away that I had to find out more,” recalls Stephan Kloock, “and it wasn’t long before I started asking colleagues at Helaba Digital to explore the possibility of investing.”
Philipp Kaiser, Managing Director, Helaba Digital
Once the initial step had been taken, things began to move very quickly: “The possibility of us investing in Arabesque S-Ray made quite a splash at the Bank last spring. The prospect sparked interest from all manner of different units right across Helaba,” recalls Philipp Kaiser. This proved a decisive factor, because the Board of Managing Directors also had to be convinced of the benefits of investing. “The widespread enthusiasm among colleagues strengthened our case enormously. Their inspiration and the ideas they had about how we might make use of the ratings in practice were very important,” confirms Stephan Kloock. “The expertise in these areas, to which we gain access through the relationship with Arabesque S-Ray, complements our own strengths in banking, regulation and product structuring. And reliable, data-driven sustainability ratings are an important issue for many of our customers.”
Andreas Feiner, CEO of Arabesque S-Ray
Turning to his partners, Andreas Feiner adds, “The joint development work and two-way knowledge-sharing are obviously important factors in our co-operation and of course in Helaba we have gained not just a partner, but also a big and very interesting customer.” Lucie Haß nods in agreement: “S-Ray is useful for a number of different Helaba units and subsidiaries. Helaba Invest is looking into using it directly, for example, and we have already started discussions with other potential users.”
Lucie Haß, Managing Director, Helaba Digital
The co-operative relationship between Helaba and its start-up partner will continue to grow and spread to more and more of the Bank’s operating divisions. It is no wonder Andreas Feiner has big plans. S-Ray rates around 7,000 of the world’s biggest companies at the moment and intends to increase this to 100,000 companies over the next few years. The actual rating is still evolving too: “We are currently working on a platform to enable companies to publish their own sustainability data, which will further enhance our data sources. We are also developing a sustainability rating specifically for real estate in collaboration with Helaba and other partners,” concludes Andreas Feiner, whose plans to advance these developments and keep Arabesque S-Ray in the ascendant include spending a couple of months in Silicon Valley as soon as possible this year to discover what inspiration the epicentre of the start-up scene can provide.
Lucie Haß and Philipp Kaiser are the managing directors of Helaba Digital, a subsidiary focusing on investments in start-ups and technologies.