On February 5, 2018 Institutional Shareholder Services Inc (ISS), a US proxy adviser, announced the launch of its Environmental & Social QualityScore which will measure the quality of corporate disclosures on environmental and social issues, including sustainability governance, and identify key disclosure omissions.
ISS notes that expectations regarding disclosure practices are defined by industry groups and reflected in standards such as the Global Reporting Initiative, the Sustainability Accounting Standards Board standards and the Taskforce on Climate-related Financial Disclosures recommendations. The ISS scores will measure the depth and extent of companies’ disclosures and the information in the ISS reports will be sourced from company publications including mainstream filings, sustainability and CSR reports, integrated reports, publicly available company policies and information on company websites.
Initially six industry groups are being covered. These comprise energy, materials, capital goods, transportation, automobiles and components, and consumer durables and apparel, as these are considered to be sectors based on industries most exposed to environmental and social risks. Later in 2018 ISS plans to add 18 additional industry groups to its coverage and these will include consumer services, media, retailing, food, pharmaceuticals, banks, real estate and utilities.
In measuring a company’s level of environmental and social governance disclosure risk, this will be considered both overall and within eight broad categories. So far as environmental disclosures are concerned, the areas that will be considered include management of environmental risks and opportunities, carbon and climate, natural resources and waste and toxicity. Human rights, labour, health and safety, stakeholder and society and product safety, quality and brand will be the topical areas for social-related disclosures.
(ISS, Launch of Environmental & Social QualityScore, 05.02.18)