ISS ESG - Governance QualityScore

Data category

Rankings

Brief description of the data offering

Governance Quality Score is an objective data-driven approach to measure and identify areas of risk in Board Structure Compensation programs, Shareholder Rights, and Audit and Risk Oversight.

Governance QualityScore rests on the analysis of more than 220 factors and a robust data set, and features company-level decile scores for a quick understanding of the drivers of a company's governance risk, and pillar scores to assess governance attributes under the categories above. Decile scores provide an indication of relative governance quality supported by factor-level data that is critical to the research process, while historical scores and data provide greater context and trending analysis to understand a company's approach to governance over time.

Covering more than 5,700 companies in 30 markets, Governance QualityScore scores indicate a company's governance risk relative to its index and region. A score of 1 indicates higher quality governance practices and lower governance risk, while a score of 10 indicates the opposite.

  • More than 220 factors are analysed, with the specific factors under analysis varying by region, and ranging up to 124 factors in one region
  • Methodology focuses on quantitative and qualitative aspects of governance, including global standards and alignment with ISS voting policy in each region
  • Methodology identifies the range of practices that issuers adopt on each governance factor, categorized to reflect most common practices
  • Weighting of each factor and scoring of each individual answer is determined through a combination of quantitative modelling and qualitative judgment based on ISS ESG's expertise
  • Scores are refreshed daily and are relative to an index (i.e. SP500) or region (i.e. Nordic)
  • Issuers are invited to review and verify their data year-round
  • Annual review ensures the methodology remains in step with the ISS benchmark policies as they adapt to reflect developments in regulatory/market practice
  • Year-round focus, with event-driven data updates for capturing changes to a company's governance structure on an ongoing basis

In February 2021, ISS ESG rolled out a comprehensive update to its Governance QualityScore methodology, adding cybersecurity, diversity and sustainability committee independence as new factors.

Where and how do you source your data?

Data is collected from company filings, as well as ongoing event-driven data updates as reflected in public disclosure, press releases and company websites. Companies undergo regular top-to-bottom reviews and are verified by ISS’ corporate governance analysts. In addition to internal reviews for quality, companies may receive an opportunity to verify their data using one of ISS’ data verification and/or draft review processes. Company research and ratings are updated daily, based on newly published, publicly available information.

Who are the data users?

Data is used by a broad range of institutional investors, asset managers, asset owners, fund managers, banks, government institutions, universities and research firms. 

What is the cost for your data offering?

Pricing is based on the method by which data is delivered. ISS ESG can provide data via its proprietary platform, DataDesk, or via data feed. Pricing for this solution is available upon request.

What are the key attributes that differentiates the data you offer?

  • High quality data. ISS ESG’s data-driven scoring and screening methodology reflects best practices across global capital markets, as well as the views of institutional investors, issuers, and thought-leaders worldwide. Core governance factors are applied globally, enabling investors to benchmark core governance practices and risks for companies across markets and regions.
  • Insights from industry specialists. ISS ESG employs a dedicated team of data analysts organized according to topics (issues) and regions/markets.
  • Flexible delivery options. ISS ESG enables investors to search, screen, and filter data using ISS Governance QualityScore in a variety of ways that suit their needs. Options include ISS ESG's proprietary online platform, DataDesk, data feeds, API to profiles, and various third-party platform integration, such as FactSet or Bloomberg.
  • An integrated environmental, social and governance solution. The service combination of the various governance and responsible investment related services offered by ISS allows investors to address ESG challenges with one common approach and rely on global account management and research teams able to offer coherent and unified answers and solutions to their ESG needs. ISS ESG is a true one-stop shop, able to support investors across all ESG related topics.

Tweet

@ISSESG's Governance QualityScore uses a numeric, decile-based score that indicates a company’s #governance risk across four categories: board structure, #compensation, #shareholder rights and takeover defenses, and audit and risk oversight.

Learn more: https://www.issgovernance.com/esg/ratings/governance-qualityscore/

Contacts

Maximilian.Horster@iss-esg.com

Corporate Statements

Turning knowledge into action

Maximilian Horster, head of ISS ESG, foresees several trends will shape the environmental, social and governance (ESG) investment space over the next 12 months. Environmental Finance spoke with him to see how ISS ESG is tailoring its data, index and reporting solutions as a result

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