ESG Risk Rating Methodology

How we calculate and classify ESG risk scores for publicly traded companies.

Scoring Process

1. Data Collection

We collect publicly available data from company disclosures, regulatory filings, news sources, and third-party ESG data providers. Data sources include annual reports, sustainability reports, proxy statements, and media analysis.

2. Exposure Assessment

Each company is assessed on its exposure to material ESG risks based on its industry, business model, and geographical operations. Exposure is scored from 0 (minimal) to 100 (extreme).

3. Management Assessment

We evaluate how effectively each company manages its ESG risks through policies, targets, reporting, and historical performance. Management scores range from 0 (no management) to 100 (strong management).

4. Pillar Scoring

Three pillar scores are calculated: Environmental (E), Social (S), and Governance (G). Each pillar combines exposure and management scores to produce a net risk score of 0–100.

5. Total Score & Rating

The total ESG risk score is an aggregation of the three pillar scores. The final score determines the risk category: Negligible (0–15), Low (15–30), Medium (30–50), High (50–75), or Severe (75–100).

Pillar Framework

Environmental (E)

Climate change & carbon emissions
Resource use & circular economy
Waste & pollution management
Water usage & stewardship
Environmental compliance

Social (S)

Human capital management
Labor practices & supply chain
Health & safety
Community relations
Product safety & quality

Governance (G)

Board composition & oversight
Executive compensation
Shareholder rights
Business ethics & compliance
Transparency & disclosure

Risk Categories

Category	Score Range	Description
Negligible	0–15	Minimal ESG risk exposure with strong management practices.
Low	15–30	Low ESG risk; company has good management of most material issues.
Medium	30–50	Moderate ESG risk; some material issues may be undermanaged.
High	50–75	High ESG risk; significant exposure with insufficient management.
Severe	75–100	Severe ESG risk; critical exposure with minimal management.