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ISS ESG, the sustainable investment arm of ISS STOXX, released a report summarizing the results of its inaugural ESG Corporate Rating Survey, which was undertaken between September 25 and October 20, 2023, as a structured, formal exercise to obtain robust feedback from institutional investors and a wide range of market participants globally. In total, ISS ESG received 511 responses to the survey, including 90 responses from institutional investors and their consultants and 421 from non-investors, primarily from corporate sustainability departments, directors, and consultants.
Key findings from the ISS ESG Corporate Rating Survey Results Report include:
- Regulatory Developments: Among regulatory regimes, global investor and non-investor respondents (57 percent and 43 percent respectively) assigned a very high degree of relevance to the EU Taxonomy for the ESG Corporate Rating methodology.
- Rating Approach to Materiality: The implementation of a double materiality approach was assigned as being ‘very relevant’ or ‘of higher relevance’ both by investor and non-investor respondents (71 percent and 81 percent respectively).
- Investor Approaches: (1) Most investor respondents identified ESG risk assessment as very relevant or of higher relevance, followed by reporting and sustainability impacts (83 percent, 79 percent, and 77 percent respectively). (2) Analyst Opinions, Absolute letter grades, Indicator-level assessment details, and ESG Performance Scores were considered the most useful ESG Corporate Rating measurements/outputs by investor respondents.
- Thematic Priorities: Climate change was identified as the most relevant thematic topic across all sectors and flagged by both respondent categories, followed by Audit & Risk Oversight (investor respondents) and Worker Health & Safety (non-investor respondents).
- Quality and Timeliness: Robust issuer dialogue processes, characterized by the timeliness of reflecting new issuer disclosures in the ESG Corporate Rating, the opportunity for issuers to submit requests and information, and the accessibility and responsiveness of rating analysts, were assessed as very relevant by the majority of investors as well as non-investor respondents (over half and two thirds respectively). With regard to Corporate Governance enhancements, ‘consideration of market-specific governance risks’, a more comprehensive assessment of governance risks’, and ‘balancing the weight of the governance pillar with the industry-specific environmental and social risk exposure’ were prioritized over raising the weight of the governance pillar.’
To download a copy of the report summarizing the full survey results, please click here.
Related Article: EU Boosts Sustainable Investing with New ESG Ratings Regulation
“As a leading ESG data, research and analytics provider and a trusted partner to the global institutional investor community, today’s ESG Corporate Rating Survey results announcement is the latest in a program of established initiatives underscoring ISS ESG’s commitment to transparency and engagement with stakeholders,” said Kristina Rüter, Global Head of Methodology at ISS ESG. “We believe that this approach enhances the continuing value and relevance of our methodology, processes, and the service we deliver to investor clients, globally.”
For further information relating to current ISS ESG methodologies and processes governing research and solutions more broadly, please click here. Designed to support institutional investors in selecting the data and signals best suited to successfully act on their individual ESG investment strategies, ISS ESG’s methodology and related transparency initiatives ensure credible and reproducible results, serve to engage rated issuers, and allow for flexible use and customization of deliverables by our investor clients. Further, the ISS ESG Gateway provides public access to a range of high-level ISS ESG corporate ratings and scores as well as fund ratings.