Sustainalytics ESG Ratings for Banks and Green Investing

Sustainalytics ESG Ratings for Banks and Green Investing is a game-changer for the financial sector. Sustainalytics provides ESG ratings to over 1,300 companies, including banks, to help investors make informed decisions.

These ratings assess a bank's exposure to ESG risks and opportunities, such as climate change, human rights, and governance. Sustainalytics uses a comprehensive methodology that considers over 90 ESG indicators.

Investors are increasingly seeking to invest in green assets, and Sustainalytics' ratings help them identify banks that are committed to sustainability. By investing in banks with high ESG ratings, investors can support the transition to a low-carbon economy.

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Sustainalytics considers more than 450 aspects to assess 70 variables, measuring a company's exposure to industry-specific ESG risks and evaluating its management. This comprehensive approach helps investors make informed decisions.

Sustainalytics is an independent firm that has been a leader in corporate governance and ESG research for over 25 years. It provides information on companies that represent more than 80% of the total market capitalization.

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The firm's ESG Risk Ratings measure a company's exposure to industry-specific material ESG risks and how well it manages those risks. The ratings are categorized across five risk levels: negligible, low, medium, high, and severe.

ESG ratings measure a company's long-term sustainability and future societal and environmental impact.

Each rating agency bases its reports on a different selection of indicators and uses varied methodologies to compile their ratings.

Sustainalytics' ESG Risk Ratings measure a company's exposure to industry-specific material ESG risks and how well a company is managing those risks.

Company ratings are categorized across five risk levels: negligible (below 10 points), low (10-20 points), medium (20-30 points), high (30-40 points), and severe (above 40 points).

Dormakaba improved its Sustainalytics ESG Risk Rating by 1.2 points since 2022, achieving 19.3 points and being classified in the low-risk group.

Sustainalytics' report considers more than 450 aspects that help assess 70 variables, measuring a company's exposition to industry-specific ESG risks and evaluating its management.

The Sustainalytics ESG Risk Ratings are used by investors to support the development and implementation of responsible investment strategies internationally.

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Sustainalytics has launched several indices that track companies' sustainability performance. One of the notable indices is the Jantzi Social Index, launched in 2000, which is the first socially-screened stock index composed of Canadian companies.

The Global Compact 100 index, launched in 2013, tracks Global Compact signatories with high ESG ratings from Sustainalytics. This index is a real-time stock index that provides a snapshot of companies' sustainability performance.

The World Bank issued a sustainable development note linked to Sustainalytics' Global Sustainability Signatories Index in 2018. This note returns the principal amount plus the positive return of the index, making it a unique investment opportunity.

Here's a breakdown of the issues driving Morningstar/Sustainalytics ESG Risk Ratings, categorized by their contribution to the overall rating:

Sustainalytics had flagged governance concerns at Volkswagen months before the 2015 emissions scandal.

Sustainalytics also identified corporate governance concerns at Fiat Automobiles 18 months before they were accused of breaking emissions laws in 104,000 diesel vehicles in January 2017.

Harvard Business Review started including Sustainalytics' ESG Rating in its assessment of the 100 best performing CEOs in the world in 2015, highlighting the importance of ESG considerations in corporate governance.

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Green Finance is a growing trend that's making a big impact. In 2017, ING Group issued the first sustainability improvement loan, where the interest rate is pegged to the sustainability rating of the lender, Koninklijke Philips N.V.

This innovative approach to lending is a great example of how green finance can be used to encourage sustainability. The interest rate is tied to the sustainability rating, so the lender is incentivized to improve their sustainability performance.

Sustainalytics provides a crucial service in evaluating the sustainability of green bonds and loans. They offer "second opinions" that assess the framework of the issuer's green, social or sustainability bond.

Their expertise is recognized by investors, who voted Sustainalytics as the "Most Impressive Second Opinion Provider" in the GlobalCapital Sustainable and Responsible Capital Markets Awards in 2017 and 2018.

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