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ESG Vector Score
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As demand for ESG-driven investing has accelerated, so too has the number of data providers– each with varying information, reporting components and levels of transparency. This has created significant confusion and subjectivity for investors to assess the magnitude and direction of individual companies’ ESG-related issues.
The Northern Trust ESG Vector Score is a measurement that assesses publicly traded companies in the context of financially relevant environmental, social and governance (ESG) related criteria that could impact their operating performance.The Methodology
This industry-first approach marries two leading sustainability disclosure frameworks – the Sustainability Accounting Standard Board’s (SASB) Standards, which are industry-specific sustainability disclosure standards focused on financial materiality, and the thematic structure of the Task Force on Climate-related Financial Disclosures’ (TCFD) recommendations.
It applies TCFD’s anticipatory framework on governance, strategy and risk management – beyond simply climate – to all financially material ESG risks across the SAB Standards, resulting in a comprehensive risk assessment. Additionally, the Score places a further emphasis on corporate governance because of the impact it can have on long-term value.
Key Benefits
- Enables more intentional and transparent integration of ESG considerations into investment processes
- Provides a consistent, transparent methodology to gain greater clarity when building and managing sustainable portfolios
- Offers more precision in identifying ESG-related business risks that could impact its performance
- Assists in prioritizing corporate engagements, further aligning sustainable investments and stewardship