HomeRI ResourceFTSE RussellESG scores and beyond. Part 2 – Contribution of themes to ESG Ratings: a statistical assessment
Research and White Paper

A FTSE Russell ESG rating is the culmination of a rigorous process that
combines various aspects of an issuer's total Environmental, Social or
Governance exposure and performance, into a single score. Whereas the
process synthetizes ESG information objectively, a company’s exposure to the
Environmental, Social or Governance themes is ultimately driven by its activity.
However, while some themes are important to all issuers, and will participate in
most of the FTSE Russell’s ESG rating, others will contribute less.

With the attention of investors being increasingly focused on sustainability
issues, awareness of these ESG ratings characteristics is essential, as it
allows the user to have a better overview of their meaning.

This paper answers the question “What themes matter most in ESG
ratings?”, by explaining the information underpinning FTSE Russell’s ESG
rating and identifying the themes which provide the highest contribution to an
overall score. It

• Provides an overview of the FTSE Russell’s ESG dataset and rating
methodology

• Measures the ESG themes’ individual contributions to the overall ESG
performance

• Distinguishes the most contributing themes by industry group

• Proposes approaches on how best to use the various themes’
identified contributions

CATEGORIES: Asset Classes: Equity Investment Style: ESG Investment Style: Sustainable