Sustainalytics Launches its ESG Risk Ratings
Materiality-Driven ESG Ratings Framework Enables Investors to Better Understand the Unmanaged ESG Risks Facing Companies
September 12, 2018, Amsterdam – Sustainalytics, a leading provider of ESG and corporate governance research, ratings and analysis, today launched the Sustainalytics’ ESG Risk Ratings, the firm’s next generation ESG Research and Ratings product. The ratings are designed to help investors identify and understand financially material ESG-related risks within their investment portfolios and how they might affect long-term investment performance.
With ESG-related considerations increasingly being integrated into investment processes, investors are seeking to better understand the ESG risk exposure facing specific companies and portfolios of companies. Sustainalytics’ ESG Risk Ratings offer investors a distinct risk signal, and deep insights into why certain ESG issues are considered material for a company and how well a company is managing those risks.
Supported by a robust materiality framework, Sustainalytics’ ESG Risk Ratings provide a quantitative measure of unmanaged ESG risk and distinguish between five levels of risk: negligible, low, medium, high and severe. Investors can use Sustainalytics’ ESG Risk Ratings for ESG integration, investment analysis, index and fund creation, voting and engagement, and screening and benchmarking.
“As the integration of ESG factors plays a more significant role in investment decision-making worldwide, our clients are seeking better signals that allow them to evaluate the impact of ESG risks on their investments,” said Dr. Hendrik Garz, Head of Sustainalytics’ ESG Rating Products. “Building on our commitment to deliver innovative products and services, Sustainalytics’ ESG Risk Ratings deliver powerful ESG data points that can be integrated into valuation models and portfolio construction in meaningful and multifaceted ways.”
Sustainalytics’ ESG Risk Ratings leverage an innovative approach that combines the concepts of management and exposure to arrive at an assessment of ESG risk that is comparable across all industries. With the risk assessments being absolute rather than relative to a group of peers, investors have a clear lens into a company’s performance relative to any other company in any subindustry or region. Other key distinctions of the ESG Risk Ratings include dedicated ESG risk exposure and ESG management assessments, company-specific considerations for exposure related to geography or business model, and fully integrated, comprehensive corporate governance research and ratings.
Sustainalytics’ ESG Risk Ratings universe covers 9,000 public and private companies and will expand to over 10,000 companies in early 2019. To learn more about Sustainalytics’ ESG Risk Ratings, please visit here.
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