Crossject | ALCJ FP | Supergenerics | France | Sustainability / ESG

Sustainability score

Company (Sector)
3.3 (5.6)

Sustainability is made of analytical items contributing to the E, the S and the G, that can be highlighted as sustainability precursors and can be combined in an intellectually acceptable way. This is the only scale made available

More on Sustainability / ESG ...

	Score	Weight

Governance
Independent directors rate	5/10	25%	More ...
Board geographic diversity	0/10	20%
Chairman vs. Executive split		5%

Environment
CO² Emission	1/10	25%	More ...
Water withdrawal	1/10	10%

Social
Wage dispersion trend	4/10	5%	More ...
Job satisfaction	10/10	5%
Internal communication	10/10	5%

Sustainability score

3.3/10

100%

Sustainability matters

As a small-cap company, Crossject likely prioritises ESG issues less than larger corporations. A brief section of its annual report outlines seven areas where these concerns are expected to grow: governance, human rights, the environment, labour relations, ethics, local development and consumer-related issues. The company also notes that an ethical charter, particularly relevant in the US context, was introduced back in FY20.

Environmental score

Company (Sector)
1.2 (3.8)

Data sets evaluated as trends on rolling calendar, made sector relative

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Parameters	Score	Sector	Weight
CO² Emission	1/10	3/10	30%
Water withdrawal	1/10	4/10	30%
Energy	1/10	3/10	25%
Waste	2/10	4/10	15%
Environmental score	1.2		100%

Environment matters

As a small-cap company, Crossject provides limited information on this topic. The annual report briefly addresses some sustainability issues (see the relevant section). It is however fairly common for small-cap companies not to disclose extensive details at this stage.

Environmental metrics

Energy (GJ) per €m in capital employed	CO² tons per €m in capital employed	Cubic meter water withdrawal per €m in capital employed	Tons waste generated per €m in capital employed

Crossject Pharma

Sector figures

Company	Environment score	Energy (total, in GJ)	CO2 Emissions (in tons)	CO2 Compensation (in tons)	Water Withdrawal (in m3)	Waste (total, (in tons)

AstraZeneca	8/10	6,033,874	139,596		3,440,000	26,285
Bachem^BH	1/10	155,705	8,476		139,315	14,439
Bayer	3/10	32,598,000	2,960,000	710,000	53,000,000	1,021,000
BB Biotech^BH	4/10		33		3,434	9
BioNTech	8/10	253,544	6,449	0	201,000	1,510
Crossject^CR	1/10
CureVac	1/10
Faes Farma	6/10	100,641	6,005		167,623	1,520
Genmab	6/10	43,916	1,697		n/a	n/a
Grifols	6/10	3,245,093	180,165		3,587,357	51,808
GSK plc	5/10	9,277,200	565,000		7,000,000	47,300
H Lundbeck	9/10	404,118	27,497		254,025	9,598
Hikma Pharmaceuticals	4/10	1,514,880	123,307		1,365,980	12,311
Ipsen	8/10	313,798	15,712		110,711	4,390
Lonza Group	3/10	6,658,000	537,000	0	28,097,000	57,100
Merck	5/10	8,620,992	1,085,123	0	12,430,923	161,143
Novartis	7/10	5,800,000	237,000		33,300,000	31,100
Novo Nordisk	9/10	5,040,821	101,000		5,213,000	229,690
Novonesis	3/10	5,677,646	445,361		10,469,560	831,563
PolyPeptide^BH	5/10	116,060	9,927		138
Roche Holding	6/10	8,492,000	315,030		15,500,000	25,279
Sandoz	3/10	3,000,000	239,700		18,100,000	60,800
Sanofi	7/10	10,896,656	374,349		10,300,000	146,950
Siegfried^BH	2/10	1,901,627	68,166		6,329,000	80,605
UCB	8/10	704,495	21,723		497,606	6,303
Virbac	5/10	375,458	30,277		148,614	6,556

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Social score

Company (Sector)
4.6 (6.4)

Social matters

The level of information concerning social issues is also quite limited which is hardly a surprise for a small cap company. However, Ethifinance ESG Ratings, the rating agency specializing in rating the ESG performance of small and medium-sized companies listed on European markets, awarded Crossject the Ethifinance 2024 Silver Level certificate to recognize its ESG performance in FY23. This recognition of the group’s commitment confirms its desire to develop its corporate social responsibility.

Quantitative metrics (67%)

Set of staff related numerical metrics available in AlphaValue proprietary modelling aimed at ranking on social/HR matters

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Parameters	Score	Weight
Staffing Trend	9/10	15%
Average wage trend	4/10	30%
Share of added value taken up by staff cost	1/10	20%
Share of added value taken up by taxes	1/10	15%
Wage dispersion trend	4/10	20%
Pension bonus (0 or 1)	0
Quantitative score	3.7/10	100%

Qualitative metrics (33%)

Set of listed qualitative criterias and for the analyst to tick

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Parameters	Score	Weight
Accidents at work	4/10	25%
Human resources development	8/10	35%
Pay	3/10	20%
Job satisfaction	10/10	10%
Internal communication	10/10	10%

Qualitative score	6.4/10	100%

Sector figures

Company	Social Score	Quantitative score	Qualitative score	Staffing

AstraZeneca	7.9	8.1	7.5	91,971
Virbac	7.4	6.7	9.0	5,736
UCB	7.3	6.5	9.0	9,659
GSK plc	7.1	6.4	8.6	68,286
BB Biotech^BH	7.0	5.8	9.7	0.00
Sanofi	7.0	6.8	7.6	77,692
BioNTech	7.0	7.6	5.8	6,952
Lonza Group	7.0	6.7	7.6	19,289
Genmab	6.9	6.3	8.3	2,722
Bachem^BH	6.9	6.4	7.9	2,350
Siegfried^BH	6.9	6.0	8.7	0.00
Novo Nordisk	6.8	5.9	8.7	78,591
Novartis	6.6	6.0	7.9	75,124
Roche Holding	6.6	5.3	9.3	102,991
Grifols	6.5	5.8	8.0	21,923
PolyPeptide^BH	6.5	7.7	4.0	1,371
H Lundbeck	6.4	5.7	8.0	5,808
Sandoz	6.3	7.0	5.1	23,306
Bayer	6.3	5.5	8.0	93,571
Merck	6.2	6.7	5.3	63,475
Ipsen	5.9	4.5	8.7	5,371
Hikma Pharmaceuticals	5.9	5.6	6.4	9,331
Novonesis	5.5	4.7	7.2	7,041
Faes Farma	3.6	4.7	1.3	1,802
CureVac	2.7	2.4	3.3	979

MORE DATA

Sustainability / ESG by AlphaValue:

Doubt driven, focused on dynamics

AlphaValue was set up in 2009 as an ESG native firm: since inception, no research could be published without filling up the ESG relevant items. ESG has always been there as a natural building block of the research effort.

Without much pretence, AlphaValue has accumulated 11 years of proprietary, practical data in a consistent way that has been made to “talk” with financial data. The efforts have been aimed at solving the main conundrum of ESG analytics: avoiding useless and noisy data. AlphaValue ESG data is intimately connected to the fundamental research work and its continuous updating process. In other words, AlphaValue ESG data can be made to resonate at will in terms of financial implications for those investors with the willingness to do so.

Over the last 3 years, this data, or rather the dynamic of this data, has been put at work so that it impacts directly and consistently on valuations across AlphaValue’s 450 + stocks universe. This is considerable progress vs. the dominant “consumption” of ESG raw data: ESG-type conclusions are sitting next to valuation fundamentals but hardly any investor is in a position to bridge effectively the two in a consistent and repeatable way. It takes more than a spreadsheet to get stable and auditable results that work 100% of the time.

AlphaValue reckons that it currently is the only equity research provider in Europe to have reached this stage: a perfectly smooth on-boarding of ESG data, on a continuing basis, impacting valuation fundamentals day and night.

This is available on every stock, every sector, every stock selection, every day.

Heretical ESG opinions?

ESG is a contradiction in terms. Without a good Governance, the Social and Environment items will never show progress. Social is for stakeholders and thus unlikely to please shareholders. The long-term view that good pay/working conditions are ultimately good for shareholders is, like any promise, better left to those who want to believe in it. It does not work for normal investment horizons

Environmental gains will not happen without good Governance but this is not enough as environmental progress will not happen without coercion from governments/supra-governments. There is no reason why a corporate will spend more for a possible collective gain tomorrow when it can have better returns now for its shareholders.

The environment is a cost of massive complexity and a universal one as data improves and allows for intricate tracking of what corporates are up to. There is no practical way a corporate can be valued through a web of changing definitions of environmental data. AlphaValue holds the view that all corporates are made to pay through lower GDP growth expectations resulting from friction costs. The only dimension that really matters from an investment perspective is whether a given corporate makes an extra effort vs. peers. A good ‘E’ rating shall not be driven by absolute levels but by the dynamic of emission controls relative to peers. Dumping cement stocks because they spit out carbon is a narrow view of what ESG implies.

Sustainability scores only

AlphaValue always refused to supply a pecking order of its coverage along some improbable ESG scale. It just does not make sense to mix opposing signals in a single ranking.

Sustainability is a different proposition where analytical items contributing to the E, the S and the G can be highlighted as sustainability precursors and combined in an intellectually acceptable way. This is the only scale made available by AlphaValue.

Sustainability impacts target prices

From 1-12-2020, AlphaValue substituted sustainability metrics for its Governance and Social ones when it comes to impacting valuations;

Indeed since 2019, all DCF (or DCF equivalents for Financials) have been impacted by Governance and Social metrics to connect directly ESG-type findings into share price targets and bring consistency across the board. The impact is driven by adjusting the small ‘g’ conventionally used to assess the growth to infinity. This is being tweaked to recognise, say, that good governance ultimately pays off.

The same procedure is now stemming from Sustainability metrics instead.

For the record, this has been made possible as AlphaValue has finalised its proprietary E scoring, now extended to 4 items (GHG, Waste, Water, Energy) on which a degree of data stability seems to emerge.