30 June 2020
Sustainalytics has broadened its range of environmental, social and governance (ESG) research, launching both an ESG Data offering and its Country Risk Ratings over the last year, to enable investors to assess companies and countries on various ESG risks, themes and indicators.
The ESG Data offering was launched in February, designed to cater for investors who are becoming more sophisticated in their approach to ESG. The product offers a broad set of ESG indicators designed to fulfil the needs of investors looking to develop ESG insights, and can be used for security selection, portfolio construction, risk and scenario analysis.
It uses more than 220 indicators and 450 fields, including both qualitative and quantitative data, to assess over 11,000 companies across 138 sub-categories. Data points can include a company's environmental policy, the carbon intensity trend of a company relative to its peers, or the quality of a business ethics programme.
The firm's Country Risk Ratings, launched in September last year, look to build on a credit ratings agency's country rating by also looking at how well a country is utilizing and managing its natural, social and institutional capital to generate long-term wealth and prosperity. It does this by using World Bank data on countries' assets, and assessing their ESG performance, which ESG trends are affecting them and how are they affected by any specific ESG events, such as conflicts or natural disasters.
Using more than 30 indicators, the Country Risk Rating assigns to the country an ESG risk, of negligible, low, medium, high and severe. This rating is intended to supplement traditional credit risk analysis in the sovereign bond market.
Elsewhere, Sustainalytics continues to engage with companies over ESG risk, as defined by its flagship ESG Risk Ratings, where it has engaged with over 250 high-risk companies. EF