The Basics
Content Category: ESG
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IdealRatings Inc. empowers capital-market stakeholders with unique and accurate screening solutions that offer comprehensive insights of company’s adherence to Responsible Investment parameters. Covering over 40,000 issuers globally, IdealRatings provides users with access to over 10 million data entries. It offers an array of screening processes from environmental, social, and governance (ESG) qualitative and quantitative datasets, an ESG scores and ratings dataset, regulatory reporting, and business involvement datasets. IdealRatings users can integrate their own investment guidelines to screen out irrelevant stocks from the investable universe.
IdealRatings screens companies against a set of in-house sustainable investment guidelines derived from national and international standards. Such screening provides an overall view of a company’s non-financial performance; it also complements the traditional financial screening and assists in sustainable investment decisions. Users can visualize a company’s sustainability plans, which entails a firm’s pertinent policies, programs, and tactics. Once the company is assessed based on the ESG plans in its business activities, it becomes easy to identify “best-in-class” companies within stronger ESG performance relative to industry peers.
The Coverage
Asset Class: Public Companies
Data Frequency: Monthly
Delivery Frequency: Monthly
History: Data available back to 2016
IdealRatings’ extensive global coverage allows for comparative ESG analysis across regions and market cap sizes. Individual inputs are aggregated using an industry-weighted methodology to enable comparisons across both sectors and geographies.
The Differentiators
IdealRatings has particularly strong coverage in the Asia Pacific and presents a more granular set of data items than its competitors.
IdealRatings’ ESG products also allow users to screen or score companies based on their own criteria, making it easy for them to recognize where values, beliefs, and investment styles differ.
Example Use Case
The IdealRatings ESG Comprehensive dataset provides a standardized, concise measure of ESG performance for companies across a global universe. This data is well suited for both high-level and granular investable universe selection strategies that screen for companies with ESG performance above a particular threshold. These data points are also useful for relative and sector allocation analysis because the aggregation methodology takes each KPI’s sector materiality into account.
Below we show how a user can easily isolate average ESG component scores for a business activity through time based upon whether the companies involved in the respective activity is a UNGC signatory.
The signatory status indicates whether a company has publicly committed to upholding the tenets of the United Nations Global Compact. Some of the components to attaining this status include but are not limited to CEO (or equivalent), commitment (with support from the Board), annual report of ongoing efforts, responsible operation aligning with the universal sustainability principles, engaging locally, and overall taking actions that support the society surrounding the company.
The following example illustrates the “Environmental Services” activity. The stark juxtaposition between signatories vs those not within the Environmental sub-component of ESG is expected, whereas the impact is not as noticeable for Social and Governance average scores.
IdealRatings also identifies companies who are involved in controversial activities that have a negative impact on the environment and/or society via Yes or No flags. For certain business activities, revenue screening is available to allow users to specify their own tolerance for a given company’s exposure.
Similarly, IdealRatings draws attention to companies that operate in some countries that are of concern to certain investors due to global controversies, global sanctions (which can be connected to the FactSet Global Sanctions dataset), and/or other issues. These can include companies with headquarters in the controversial countries or even subsidiaries selling their products or services within that country. However, there are also a couple of positive flag fields pertaining to green revenue and renewable energy. These allow users to hone in on sustainable practices given the prominence of client-related issues.
The details provided above are as of May 2022.
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Please visit the product page on the Open:FactSet Marketplace for more information: IdealRatings ESG Comprehensive.
