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.

Unique com­bi­na­tion of rat­ings

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.

Valu­able knowl­edge-shar­ing

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.”

A high­ly promis­ing part­ner­ship

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.”

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.”

Ambitious plans

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.

As an insti­tu­tion under public law, Helaba sees sus­tain­abil­i­ty as the core of its busi­ness and the start­ing point of every cus­tomer re­lation­ship.