According to the Global Initiative for Sustainability Ratings (GISR), there are well over 100 organisations that produce sustainability research and ratings on companies. The leading ESG data companies include Bloomberg, MSCI, RepRisk, Sustainalytics and Thomson Reuters, while Vigeo Eiris, MSCI, GMI Ratings, ISS ESG, Inrate and Sustainalytics count to the top 10 ESG rating agencies.
In a bid to secure a footing in the lucrative ESG ratings markets, credit rating companies S&P Global bought RobecoSAM’s ESG ratings business, while its biggest rival, Moody’s, acquired a majority stake of Vigeo Eiris last year. At the same time newer entrants are differentiating themselves by using big data, artificial intelligence and machine learning to evaluate companies on their ESG performance.
In addition to single ESG ratings, many agencies produce ESG-themed indices, such as for example the Dow Jones Sustainability Index (DJSI) or the FTSE4Good Index, which include companies that meet certain ESG thresholds. The world’s largest provider of ESG Indexes is MSCI, which has created over 1,500 equity and fixed income indexes, designed to help institutional investors to integrate ESG or climate considerations in their investment process and portfolios. Segmented by different investment approaches – “Integration”, “Value & Screens” and “Impact” – investors can choose from solely climate change and/or low carbon focused benchmarks, social indexes such as for example the Women’s Leadership Impact Index or indexes that combine top corporate ESG performers; the MSCI ESG Universal Index is one example.
Finally, the sustainable finance market has also boosted the emergence of ESG data providers, often one division within an ESG rating agency, offering comprehensive ESG data in particular for institutional investors. ESG ratings agency Sustainalytics, for example, offers through its ESG research team ESG data that includes more than 220 ESG indicators and 450 fields and covers over 12,000 companies. The firm also recently introduced country ESG risk ratings for over 170 countries, based on more than 40 indicators.