Basics
Content Category: ESG
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The ISS ESG Corporate Rating content set provides investors with highly relevant, material, and forward-looking environmental, social and governance (ESG) data and performance assessments. The methodology has been consistently updated for more than 25 years, delivering high-quality and in-depth research on companies’ sustainability performances.
The rating grasps ESG risks, opportunities, and impacts along the entire corporate value chain, including a dedicated SDG-based component measuring the positive and negative impact of products and services. Additionally, it monitors and integrates the existence and severity of controversies and violations of global norms in the topic-specific and overall assessment.
“Prime” status is granted to industry leaders who fulfill demanding performance expectations. These companies are well-positioned to adequately manage key ESG risks associated with their specific business model and, on the other hand, capitalize on opportunities offered by transformations towards sustainable development.
ISS ESG Corporate Rating supports strategies aligned to several regulations and guidelines:
- UN Global Compact
- UN Sustainable Development Goals
- International Labor Organization
- OECD Guidelines for Multinational Enterprises
- UN Principles for Responsible Investment
- EU Sustainable Finance Regulation
Data Overview
Asset Class: Public and Private Companies
Data Frequency: Monthly
Delivery Frequency: Daily
History: Rating data available back to 2019; raw metrics available back to 2014.
The ISS ESG Corporate Rating offering provides a standard set of more than 30 universal ESG topics assessed for all companies. The bulk of the other indicators are designed to granularly assess material industry specific ESG issues. In total, nearly 140 factors are supplied with both a rating and numeric score are provided in the data feed. The rating itself is identified from a scale of A+ (Excellent) through to D- (Poor) while the numeric scores range from 1-4, as illustrated below:
ISS ESG’s raw data delivery provides 130 raw metrics which are linked to the ISS ESG Corporate Rating. Most raw factors are accompanied by the respective coverage factor, which shows whether the content covers the complete company or just component parts of the entity. Coverage is usually assessed based on a range of thresholds (including ‘Not Specified’) from <20% through to 100%.
The ISS ESG Corporate Rating covers over 7,300 distinct corporate issuers globally, including constituents of the most relevant global and national indices.
Figure 1. ISS ESG Corporate Rating Entity Count by Region and Entity Type
Figure 2. ISS ESG Corporate Rating Entity Count by Industry
Data Methodology
The ISS ESG Corporate Rating methodology was originally developed by Institutional Shareholder Services Germany (formerly Oekom Research) and has been consistently updated for more than 25 years.
ISS ESG uses a multitude of sources from over 4,500 from selected media outlets and 150+ stakeholder sources. ISS ESG continuously updates based on these sources and any company developments such as mergers, acquisitions, spin-offs, and delistings. Company reports (i.e., annual/CSR reports), company website updates, and specific ESG Impact data (e.g., resource efficiency and emission intensity) are reviewed in depth on an annual basis.
The ISS ESG Corporate Rating product is maintained using a staged process. All ratings are continuously updated to account for material incidents such as significant controversies, accidents, or corporate actions. During the rating process, dialogue with the company under evaluation plays an important role and corporate feedback is actively sourced every second to third year. Rated entities may submit ESG updates at any time.
Use Cases
Asset Management – Peer Review and Portfolio Selection
- Compare a portfolio company's ESG performance to other companies in its industry, index, or another defined universe and use this insight to inform your stock-picking decisions.
ESG Risk
- Identify companies that may present financial or reputational risks and use this insight for investment analysis, engagement, or voting purposes.
Index and ETF Development
- Develop customized ESG products such as indices and exchange-traded funds (ETFs).
Regulatory Reporting
- Report on your portfolio's ESG performance to voluntary and regulatory ESG disclosure initiatives.
The details provided above are as of October 2021.
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