Thomson Reuters updates ESG ratings and indices

Jul 19th, 2017 | By | Category: ETF and Index News

Thomson Reuters, in partnership with boutique index provider S-Network Global Indexes, has announced changes to the methodology underlying its corporate responsibility ratings and index suite. The range also been rebranded the Thomson Reuters/S-Network ESG Best Practices Ratings & Indices to better reflect the change.

ESG Environmental Social Governance

Thomson Reuters offers a suite of ESG indices targeting equities from the US, developed market ex-US, Europe or emerging markets.

Thomson Reuters said the methodology was updated in response to changes in the way it collects ESG data and the growth of socially responsible investing in general.

The indices and ratings are compiled by S-Network using extensive Thomson Reuters’ ESG data sets.

The updated ratings system reflects enhancements that expand the coverage of data underlying the indices.  In addition, certain data points are no longer being collected and have therefore been eliminated from inclusion in the ratings.

The new ratings system will continue to emphasize metric data, such as CO2 emissions, over policy-oriented questions.

“The movement toward socially responsible investing seems to be taking hold as many companies have fallen into line behind key ESG standards to the point that those standards have become largely irrelevant in scoring ESG compliance,” explains Joseph LaCorte, CEO, S-Network. “‘ESG Best Practices’ is a better descriptor because our ratings do not make value judgments on different industries.  The ratings and indices are designed to monitor companies’ compliance with internationally accepted norms as defined by the United Nations Principles on Responsible Investing and the Sustainability Accounting Standards Board.”

“ESG factors are becoming an increasingly common contribution to index design as today’s asset management industry responds to investor interest in impact investing,” added Stephan Flagel, global head of benchmarks & indices, Thomson Reuters.  “In collaboration with S-Network, this enhancement of our methodology empowers investment professionals with a robust solution to help meet their ESG and SRI needs.”

The index suite is divided into four segments, targeting equities in the US, developed markets ex-US, Europe, and emerging markets regions. Each segment contains four indices, three of which screen for companies aligned with best practices across either environmental, social or governance lines. The fourth index combines all three screening processes to provide a representation of companies aligned with full ESG best practices.

The full index suite is listed below:

Thomson Reuters/S-Network US Large-Cap ESG Best Practices Index
Thomson Reuters/S-Network US Large-Cap Environmental Best Practices Index
Thomson Reuters/S-Network US Large-Cap Governance Best Practices Index
Thomson Reuters/S-Network US Large-Cap Social Best Practices Index

Thomson Reuters/S-Network Developed Markets (ex-US) ESG Best Practices Index
Thomson Reuters/S-Network Developed Markets (ex-US) Environmental Best Practices Index
Thomson Reuters/S-Network Developed Markets (ex-US) Governance Best Practices Index
Thomson Reuters/S-Network Developed Markets (ex-US) Social Best Practices Index

Thomson Reuters/S-Network Europe ESG Best Practices Index
Thomson Reuters/S-Network Europe Environmental Best Practices Index
Thomson Reuters/S-Network Europe Governance Best Practices Index
Thomson Reuters/S-Network Europe Social Best Practices Index

Thomson Reuters/S-Network Emerging Markets ESG Best Practices Index
Thomson Reuters/S-Network Emerging Markets Environmental Best Practices Index
Thomson Reuters/S-Network Emerging Markets Governance Best Practices Index
Thomson Reuters/S-Network Emerging Markets Social Best Practices Index

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