Over the past three years, what has been the biggest obstacle for ESG integration and risk management to be consistently cited by investors? Data. The challenge for investors surrounds the reliability, timeliness, coverage, and transparency of ESG data, as well as the lack of correlation among ESG ratings.
From day one, RepRisk built a consistent dataset with a rules-based and transparent methodology that goes back 15 years – the longest time series in the industry. And through the combination of AI and machine learning with human curation, investors leverage reliable data with the speed and breadth of coverage they require. What’s more, our outside-in approach exclusively looks at a company from an external perspective; serving as a reality check for how a company manages ESG issues and conducts its business on the ground.
A move long in the making
Our unique approach addresses the issues of reliability, timeliness, and coverage – so let’s talk about transparency.
Today we take another step forward in transparency by being the first and only ESG data provider to publish our detailed methodology, publicly, on our website. Why? Because being transparent enables our clients to make better informed decisions – and because it’s the right thing to do. While we have always been transparent with our clients and our partners, we now want to make it available to the world.
In June 2020, we launched the first of a series of Jupyter notebooks, a public online resource with Python code and sample datasets, so that our users can customize their own ESG scores and build custom portfolios.
RepRisk’s Jupyter notebooks include both the algorithms RepRisk uses to build investment and due diligence scores as well as detailed methodology information. For example, a portfolio manager can alter our algorithms to construct and monitor portfolios in compliance with business requests.
The Jupyter notebooks offer:
- RepRisk company universe, where users can see and follow the growth of RepRisk’s company universe, including a breakdown of our public and private company coverage by region (updated quarterly).
- RepRisk Index (RRI) for companies, which specifies how RepRisk quantifies a company’s reputational risk exposure to ESG issues and facilitates ESG risk assessments associated with investments and business relationships.
- RepRisk Index (RRI) for countries, which details how RepRisk quantifies ESG risk exposure for a country.
- RepRisk’s ESG scores, which allow users to calculate and customize ESG scores, as well as with respect to individual E, S, and G risk factors. It can be used as a blueprint to compute ESG scores for 180,000+ companies.
Moving forward with transparency and clarity
At RepRisk, our use case is beautifully simple: to identify and assess material ESG risks that have financial, compliance, and reputational implications. We believe that we can best serve our clients and the industry in two essential ways: deploying a clear use case for our data and being fully transparent about our methodology.
As the ESG industry matures and public and private actors are called upon to pave the way forward together, we encourage anyone using ESG data to kick the tires of the datasets they use for decision-making. With a clear view of what ESG means for your organization and what purpose the data should serve – the challenges of ESG data can be transformed into opportunities.
As a pioneer in the ESG data industry, we are excited to see the growth, acceptance, and adoption of ESG data. And we look forward to partnering with all our stakeholders as the industry continues to mature – and transparency becomes the gold-standard.