ISS ESG, the responsible investment arm of Institutional Shareholder Services (ISS) Inc., today announced the launch of the Solactive ISS SDG Leaders Index and the Solactive ISS SDG Aligned Index Series. Today’s release marks the latest index-related addition to ISS ESG’s suite of solutions supporting investors as they seek to align their investments with the United Nations Sustainable Development Goals (SDGs). For both new series of indices, potential constituents are drawn from the Solactive Global Benchmark Series (GBS) of indices. Constituents are initially screened by ISS ESG based on the identification of verified ongoing failures to respect established norms and verified ongoing involvement in controversial weapons, and those engaged in those activities are excluded. Remaining companies are then selected for inclusion based on ISS’ ESG SDG Impact Ratings,launched earlier this year.
The ISS ESG SDG Impact Rating provides a holistic metric of a company’s impact using the seventeen SDGs as a reference framework. This rating measures the extent to which companies are managing negative externalities in their operations across the entire value chain to minimize detrimental impacts, while at the same time taking advantage of existing and emerging opportunities in their products and services to contribute to the achievement of the SDGs. A company’s impact is measured thematically, following the SDG framework, as well as at an aggregate level. For each of the 17 SDGs, a company’s impact is determined by three pillars – products and services, operations, and controversies. As a result, the SDG Impact Rating provides 120 distinct data points per company, allowing for granular thematic assessments, as well as aggregate impact measurements. The rating and underlying scores are presented on a scale of -10 to +10, allowing categorization according to SDG-related impacts into five groups: significant negative impact, limited negative impact, no impact, limited positive impact, and significant positive impact.
The Solactive ISS SDG Leaders Index aims to track companies globally with an overall significant positive impact on the SDGs and no negative impact on any of the 17 single SDGs, whereas the Solactive ISS SDG Aligned Index Series aims to track various segments of the global stock market based on size and region, including only companies with an overall significant or limited positive impact on the SDGs and no significant negative impact on any of the 17 single SDGs.
“In light of the strong positive market feedback following the launch of the ISS ESG SDG Impact Rating, we are delighted to now facilitate the provision of investable indices drawing on the same unique, holistic methodology,” said Hernando Cortina, Head of Index Strategy at ISS ESG.
ISS ESG Index Solutions offer investors a choice of thematic and benchmark indices from global index providers, building on ISS’ unique and proprietary data, to track their portfolio’s performance and create index-linked investment products.
In addition, investors can leverage ISS ESG’s Custom Index Solutions to promote unique ESG strategies with broad ESG insight and the ability, working with an index provider of their choice, to create exclusive, tailor-made indices to best meet individual investors’ demands and objectives. Indices using Custom Index Solutions can be set up thematically or according to a wide set of client-specific ESG requirements.
More information about the ISS ESG Index Solutions can be found here.
By Sarah Ball, Executive Director, ISS