NEW YORK (October 20, 2021) — ISS ESG, the responsible investment arm of Institutional Shareholder Services Inc. (ISS), today announced the launch of a new proprietary EVA Leaders Index Series to enable investors to integrate ESG criteria and financial materiality across leading global companies.
The new EVA Leaders Index Series identifies sector-leading companies using economic profit as measured by a company’s Economic Value Added (EVA) margin, which converts accounting profit to economic profit by reversing accounting distortions and measuring profit after all costs. Constituent equities must also receive a medium or high ISS ESG Corporate Rating and comply with standards regarding international norms and controversial weapons in order to be eligible.
Sector-leading companies within the new EVA Leaders Index Series currently include Apple, Air Liquide, JPMorgan Chase, TC Energy, Procter & Gamble, and American Tower Corp., among others. Initial coverage spans three regions including the U.S., Europe, and developed markets.
“Through this release, ISS ESG is pleased to bring to market additional index offerings that are truly unique and differentiated by combining the trusted financial fundamental analysis of EVA with essential ESG indicators,” said Dr. Maximilian Horster, Head of ISS ESG. “As a leader in the responsible investment space, clients can count on ISS ESG to deliver best-in-class solutions and services that are supported by our highly talented team of more than 500 professionals located across global financial centers.”
Creation of the index follows a four-step process and starts with screening of constituents of the Solactive Global Benchmark Series. From there, ISS ESG screens are applied to remove prospective constituents with Red Norm Based Research flags, Red Controversial Weapons flags, and those with an overall ISS ESG Corporate Rating of D-, D, and D+. Next, the EVA screen is applied to remove prospective constituents with a negative EVA margin and, lastly, qualifying constituents are added by sector, based on descending EVA margin until reaching a market cap threshold and targeting sector neutrality. Indexes are market cap weighted after the above steps and rebalanced quarterly.
“By drawing on our deep well of proprietary financial measures such as EVA, industry leading sustainability ratings and research, and unrivalled extra-financial data, ISS ESG is delivering cutting-edge index solutions in keeping with our long-standing commitment to clients,” said Hernando Cortina, Head of Index Strategy at ISS ESG.
Index methodologies are available on the ISS website and that of the Index Administrator, Solactive AG, an authorized benchmark administrator under European Benchmarks Regulation (BMR). Index values may be obtained using the following identifiers: ISSEVAUT, ISSEVAET, and ISSEVADT.
To learn more about ISS ESG’s index offerings, please click here.
About ISS ESG
ISS ESG solutions enable investors to develop and integrate responsible investing policies and practices, engage on responsible investment issues, and monitor portfolio company practices and performance through screening solutions and the proprietary financial measure, Economic Value Added. It also provides climate data, analytics, and advisory services to help financial market participants understand, measure, and act on climate-related risks across all asset classes. In addition, ESG solutions cover fund, corporate, and country ESG research and ratings enabling its clients to identify material social and environmental risks and opportunities. For more information, please visit us at: www.iss-esg.com
Subodh Mishra, Managing Director
Institutional Shareholder Services Inc.