Institutional Shareholder Services’ (ISS) responsible investment arm, ISS ESG announced today the launch of the ISS ESG Water Risk Rating, aimed at enabling investors to identify and manage freshwater-related risks in portfolios, build freshwater-focused portfolios and investment products and conduct water-related stewardship and engagement programs.
The new water risk rating assesses 11 distinct data points per company, in order to determine exposure to freshwater-related risks, and provide an aggregated score of a company’s management of these risks. The tool’s scoring methodology assesses companies based on a Water Risk Exposure Classification (WREC), exploring individual exposure based on industry, geographical footprint of operations and supply chain risks, as well as on a Water Risk Management Performance Score (WRMPS), which takes into account a company’s risk management practices along the value chain as well as its potential involvement in controversies.
At launch, the new risk rating system will cover approximately 7,400 companies globally. According to ISS ESG, 62% of rated companies have been assessed as having either high (18%) or medium (44%) freshwater-related risks.
Dr. Maximilian Horster, Head of ISS ESG said:
“On World Water Day, ISS ESG is pleased to launch its Water Risk Rating, which provides a holistic assessment of companies’ overall freshwater-related risk, to support investors seeking to improve water-related stewardship and risk management.”