Paul Hodgson: ISS Analytics: Putting the extra-financial datasets together

Move responds to ‘marked uptick’ in investor requests for extra-financial data

Last month, Institutional Shareholder Services Inc. (ISS) announced the launch of ISS Analytics, Powered by DataDesk.

In a press release, ISS said: “DataDesk, ISS’s proprietary platform that will undergird ISS Analytics, allows users to mine rich and varied datasets now covering responsible investment, corporate performance, board practices, director characteristics, shareholder rights, takeover defenses, factors related to the audit function, and others. Additional datasets will be added throughout the year.”
In conversation with Marija Kramer, ISS’s Head of Product Development and ISS Chief Operating Officer Stephen Harvey, RI learnt of the motivation behind the launch of this new product.
“We have a rich history of collecting governance and ESG data. And in the past five years, we have seen a marked uptick in investor requests for extra-financial data,” said Kramer. “The new product integrates screening across varied datasets and will be used by investment professionals to inform their voting, identify governance risk for engagement purposes, and to aid portfolio managers in investment decision-making.”
The data that is currently found on the platform includes ISS’s QuickScore, director data – including committee membership, multiple directorships, family relationships with executives, etc. – and various responsible investment data screening and norms assessment, such as the PRI principles.

This covers 8,000 plus companies globally. The data on directors covers over 120 datapoints from ‘per cent of women on board’ to ‘director is an employee representative’ to ‘chair classification’ to ‘tenure policy’ and ISS is adding factors incrementally.For example, directors’ biographical information and skillsets will be included in future.
“Clients are still able to source data from legacy applications,” added Kramer, “which will be retired only when all datasets are available through ISS Analytics. We expect that to be by or before the end of the first half of 2017. The legacy solutions that now are, or will be, bundled under the ISS Analytics umbrella include: QuickScore, ExecComp Analytics, Voting Analytics (including Shareholder Proposal Proponents), and responsible investment (including Ethix).” ISS acquired Sweden-based ESG research firm Ethix SRI Advisors in 2015 and renamed it ISS-Ethix.

“Our response to market demand for screening solutions”

“ISS Analytics reflects our response to market demand for screening solutions that are able to draw from disparate data sets,” said Harvey.
Furthermore, ISS noted a “growing recognition that portfolio managers and analysts are increasingly incorporating governance data in their risk mitigation analysis and are looking to complement traditional research with information often overlooked by fundamental analytics.”
“Finally,” added Kramer, “there is a library of off-the-shelf screens available for clients that can be adapted by adding or taking away characteristics. For example, there is a screen for director tenure and total shareholder return (TSR) which users can then layer on additional characteristics such as committee membership.”
More information on ISS Analytics can be found here.