What is the meaning of the scores and how are they useful to investors?

Clarity ESG Risk Score allows investors to assess how well the companies and countries in a given portfolio are managing their Environmental, Social and Governance related risks and opportunities.

First, Clarity measures the degree to which individual organizations (companies and/or countries) in the portfolio face financial risks from ESG issues, then they roll the individual scores up into an overall, portfolio-level score - factor-weighted by assets and materiality. The score is easy to interpret: a score of 100 means the overall portfolio has negligible ESG risk; 1 means it is exposed to significant ESG risk.

The score allows investors to:

  • Compare portfolios across categories and relative to benchmarks
  • Serve as an initial screen for investors interested in sustainability and ESG factors
  • Determine both the level of sustainability in their existing portfolios and allow them to set sustainability targets