The NEC metric offers a wide scope of application and endless possibilities for expansion, but it requires a two-way engagement from those who wish to use it. This overview explains how the NEC may be used and developed by members and partners of the initiative and the expectations of membership.
The NEC metric gives a picture of a given object at a given time. As the plant itself, it is agnostic to size, asset class and legal structure. The methodology can apply to any object as long as there is an underlying economic activity regardless of related product or service, localization, legal form (informal, not for profit, for profit, company, holding, group of companies, etc.) and funding means (equity, debt, bond, grant, etc.).
Time frames are a key element for NEC metric evaluation because a company or an activity can rapidly change due to a strategic move, merger, acquisition, demerger or asset disposal. Two examples best illustrate this principle:
+ When Bayer absorbed Monsanto with a NEC of -62% in 2018, its NEC (1.0, 2017 and 2018, calculated by Sycomore AM) drastically decreased from -2% to -23%.
+ DONG Energy, the listed Danish state-owned utility, now Ørsted, provides the example of an impressive pace of transition: between 2006 and 2018, its massive transformation plan called “from Black to Green” led the company from a -23% to a +72% NEC score, a +95pp NEC jump (NEC 1.0, calculated by Sycomore AM for years 2006 and 2017).
Collaborative Development & Transparency
The NEC Initiative was born with a science-based and collaborative DNA founded on transparency. Therefore, each user must contribute to the collective effort of the NEC Initiative, and each user has to fully respect the premium quality ambition and the traceability and accountability rules for any NEC disclosures. In short, these are the rules and expectations for members: