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

Sustainability score

Company (Sector)
3.7 (5.5)

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	6/10	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	6/10	5%	More ...
Job satisfaction	10/10	5%
Internal communication	10/10	5%

Sustainability score

3.7/10

100%

Sustainability matters

As a small cap company, Crossject probably still pays less attention to ESG issues than larger groups. A brief section of its annual report still describes what the company considers as the seven fields where these concerns are destined to rise in the future: governance (see the relevant section), human rights, the environment, working relations, ethics, local development and consumer-related issues. The group also indicates that an ethical charter (particularly useful in the US context) was published in the FY20.

Environmental score

Company (Sector)
1.0 (3.9)

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

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Parameters	Score	Sector	Weight
CO² Emission	1/10	4/10	30%
Water withdrawal	1/10	4/10	30%
Energy	1/10	4/10	25%
Waste	1/10	4/10	15%
Environmental score	1.0		100%

Environment matters

As a small cap company, Crossject still releases a very limited amount of information of this topic. The annual report briefly addresses some sustainability issues (see the related section), but it is clearly not unusual for a small cap company not to close too many details at this point in time.

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	5,440,802	200,838		3,590,000	30,217
Bachem^BH	1/10	155,705	8,476		139,315	14,439
Bayer	4/10	35,010,000	3,000,000	0	53,000,000	1,164,000
BB Biotech^BH	4/10		33		3,434	9
BioNTech	9/10	187,160	4,681	0	102,000	1,590
Crossject^CR	1/10
CureVac	1/10
Faes Farma	6/10	91,981	7,580		166,471	1,389
Genmab	6/10	11,855	555		n/a	n/a
Grifols	6/10	3,343,532	204,565		3,676,809	51,119
GSK plc	5/10	9,489,600	644,000		7,400,000	49,700
H Lundbeck	9/10	386,917	25,291		229,874	16,694
Hikma Pharmaceuticals	4/10	1,549,422	123,638		1,231,312	14,876
Ipsen	8/10	268,337	18,104		101,824	4,038
Lonza Group	3/10	6,442,000	547,000	0	29,000,000	64,100
Merck	5/10	8,413,200	1,690,000	0	12,100,000	291,000
Novartis	7/10	6,200,000	298,100		34,600,000	34,900
Novo Nordisk	9/10	3,784,000	93,000		4,150,000	189,091
Novonesis	2/10	4,396,000	143,000		7,793,000	15,000
PolyPeptide^BH	5/10	116,060	9,927		138
Roche Holding	6/10	10,258,000	339,430		16,700,000	27,589
Sandoz	4/10	2,790,000	226,680		15,360,000	59,650
Sanofi	7/10	11,490,415	450,361		10,700,000	164,091
Siegfried^BH	2/10	1,901,627	68,166		6,329,000	80,605
UCB	8/10	932,600	22,166		476,866	10,858
Virbac	4/10	284,494	22,630		264,061	4,642

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Social score

Company (Sector)
5.1 (6.4)

Social matters

The level of social information is also quite limited, which is no real surprise for a small cap company. However, the group indicates that its equality index (Gaia index) reached 73/100 in FY23 vs 60/100 for FY22 and 46 in FY21. Note that the ESG rating agency Gaia Research rates the ESG performance of SMEs and midcaps listed on the European markets, i.e. more than 2,300 companies (also see the “workforce section”).

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	5/10	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	6/10	20%
Pension bonus (0 or 1)	0
Quantitative score	4.4/10	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

Virbac	7.4	6.7	9.0	5,638
Lonza Group	7.3	7.2	7.6	18,505
Bachem^BH	7.2	6.9	7.9	2,200
BB Biotech^BH	7.2	6.1	9.7	10.0
AstraZeneca	7.2	7.1	7.5	85,536
Genmab	7.2	6.7	8.3	2,237
UCB	7.2	6.4	9.0	9,355
GSK plc	6.9	6.1	8.6	69,861
Novo Nordisk	6.8	5.9	8.7	68,091
Sanofi	6.8	6.4	7.6	85,980
Roche Holding	6.6	5.3	9.3	103,346
Grifols	6.5	5.8	8.0	21,579
Siegfried^BH	6.5	5.5	8.7	4,012
Novartis	6.5	5.8	7.9	75,296
PolyPeptide^BH	6.4	7.6	4.0	1,240
H Lundbeck	6.4	5.6	8.0	5,677
BioNTech	6.3	6.6	5.8	6,191
Bayer	6.3	5.5	8.0	99,588
Sandoz	6.3	6.9	5.1	23,748
Hikma Pharmaceuticals	6.1	6.0	6.4	8,989
Ipsen	6.1	4.9	8.7	5,338
Merck	6.0	6.4	5.3	63,193
Novonesis	5.5	4.6	7.2	6,922
Faes Farma	3.3	4.4	1.3	1,796
CureVac	2.7	2.4	3.3	1,092

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.