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Shining a light

ISS preps its scorecard on disclosures

Investors curious about which companies have the strongest and weakest disclosure practices regarding environmental and social risks can now turn to Institutional Shareholder Services Inc.'s Environmental & Social QualityScore, an online tool.

A soft launch on Feb. 5 covered an initial set of 1,500 companies. Eventually, more than 5,000 companies are expected to be scored. Companies' overall scores will be available to the public on ISS' website in the second quarter, said Reinhilde Weidacher, Stockholm-based managing director, head of environment, social and governance research and products, at subsidiary ISS-Ethix, in an interview. The full set of data, however, will be available only to ISS clients.

"Scores measure the depth and extent of disclosure. This showcases the company's understanding of its environmental and social risks, along with its preparedness to face and mitigate them," ISS said in an accompanying fact sheet.

Companies are scored overall and within eight broad categories on a scale of 1 to 10, with 1 representing higher quality disclosure and transparency, Ms. Weidacher said.

The expectations regarding disclosure practices are based on "the specific environmental and social risks identified in industry and multi-stakeholder initiatives and reflected in authoritative standards and recommendations from groups such as the Global Reporting Initiative, the Sustainability Accounting Standards Board and the Task Force on Climate-related Financial Disclosures," the ISS said in a news release Feb. 5.

Based on the initial data, the highest scoring companies across environment and social-related disclosures include BP PLC, 3M Co., Valeo, Barrick Gold Co., Royal Mail PLC and Adidas AG. Also based on the initial data, companies in Europe tend to be among the highest scorers, said Damien Fruchart, Stockholm-based vice president, sustainable and responsible investment research at ISS-Ethix, in an interview.

ISS already scores companies on their governance risks.