Waters Rankings 2022: Best ESG data provider—Moody’s

Overview

Identifying ESG risks and opportunities can be challenging, especially when disclosures are limited. In response, Moody’s offers analyst-verified ESG assessments based on in-depth analysis of company policies and practices (such as the details contained in annual and sustainability reports). The data gathered then underpins the firm’s ESG Score Predictor, a risk management tool designed to generate predicted ESG metrics on any company, regardless of its size and private/public status.

“What truly sets Moody’s offering apart is our double materiality approach to ESG analysis. By diving into the depths of critical sustainability issues and themes, we champion a domain-defining, rigorous and consistent approach to ESG analysis that goes well beyond financial factors to consider a company’s impact on multiple stakeholders.”
Andrea Blackman, managing director, Moody’s ESG Solutions

The Solution 

Moody’s machine learning models assimilate the data gathered over its decades of ESG analysis and scoring, and then aggregate this to generate nuanced, informed estimates about the ESG characteristics of “unscored” firms. The firm’s database already contains some 300 million scored firms, but by using metrics on size, location, and industry, it can provide predicted scores for any target entity through its proprietary API

Secret Sauce 

Moody’s ESG assessments apply a double materiality lens that goes beyond financial and operational risk. Its approach, underpinned by a transparent methodology, sets aside the traditional materiality model to capture how a company impacts the environment and communities, as well as its shareholders, employees and suppliers. And, crucially, it captures how the outside world may impact and influence a company’s long-term performance.

Recent Milestones 

  • Increased the Predictor’s coverage to more than 600 industries and 12,000 national and sub-national locations. This allows companies to obtain ESG scores and climate data for any firm.
  • Increased database coverage from more than 100,000 to about 300 million companies worldwide, with plans to further increase that number in future.
  • Created an API to generate bespoke scores for any firm. This enables clients to obtain real-time scores and climate data for any company in their portfolio or supply chain.

Future Objectives 

  • Moody’s is committed to ensuring that ESG inputs are commonly applied across its range of ESG performance data and scores, its risk valuation capabilities, and the credit impact metrics incorporated into its Credit Ratings. 
  • Moody’s is expanding distribution channels through partnerships and its direct sales footprint to make its insights available to a wide range of ESG-conscious users.

 

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