The Total ESG Impact Score is a weighted average of the E, S and G scores for each bond. This weighted score puts the ESG characteristics in a broader market context, allowing for comparison within and across sectors. For example, it is possible to compare school bonds to hospital bonds.
Weighting is assigned based on where the sector has the greatest opportunity for impact, and is founded in academic research and industry knowledge. For example, since the transportation sector contributes more than 25% of all US greenhouse gas emissions, and a sustainable future requires decarbonization of our transportation system, Kestrel weighs the environmental score for transportation bonds more heavily than the social score. Similarly, the primary benefit of a K-12 school is the opportunity for education, so the S score is weighted more heavily.
Weighting does not inherently prioritize certain sectors.