Statement in Connection with Planned Methodology Update for Environmental & Social Disclosure QualityScore

ISS ESG, the sustainable investment arm of ISS STOXX, today announced it will late in the third quarter implement a comprehensive update to its Environmental & Social Disclosure QualityScore scoring methodology.

Environmental & Social Disclosure QualityScore (ESQS) is a data-driven scoring and screening solution designed to measure and identify areas of environmental and social risk through company disclosures. Scores provide an indication of the relative quality of corporate disclosures and transparency compared with industry peers and are supported by factor-level data.

Sustainability reporting has matured over the years, as have disclosure expectations. A significant development is the release of the European Sustainability Reporting Standards (ESRS), the disclosure requirements of which will be rolled out from 2025. To maintain alignment with these important new standards, the ESQS dataset is being reoriented towards ESRS to better evaluate covered companies’ disclosure preparedness and provide comparably reported data to subscribing investors. Twenty-six new factors will be introduced as part of the forthcoming update to include coverage of evolving areas such as workforce management, circular economy, and water resources. Conversely, 45 datapoints now considered less salient will be retired to prioritize the modernized, international framework-informed datasets.

Issuers within the coverage universe will have an opportunity to verify the new data in late August prior to which ISS ESG will provide more granular details on the nature and scope of the planned enhancements.