Additional information regarding RDP 02.1.
FTSE Russell uses data from different sources for different products - (1) ESG Ratings and Raw Data (2) ESG indexes.
(1) ESG Ratings and Raw Data
FTSE Russell's ESG Ratings data relies upon publicly disclosed information. Our primary sources of data are reports and other disclosures from companies. However, we will also use data from other sources such as governments and NGOs etc.
FTSE Russell's Green Revenues model is sourced from the audited financial statements, website and other public sources of each of the approximate 13,500 companies. We will accept information reported to us directly from companies (but our preference is for the information to be provided publicly).
(2) ESG indexes
FTSE Russell's ESG Ratings and Green Revenues data are used when constructing our ESG indexes. When additional ESG data is needed (i.e. ESG topics not covered by ESG Ratings / Green Revenues), we will source data from / partner with external research providers for index construction.
Additional information regarding RDP 02.3.
Summary of FTSE Russell's ESG Ratings process
FTSE Russell's ESG data model consists of four hierarchical levels for each company in the research universe.
(1) Indicators: There are over 300 indicators in the ESG data model that are applied to each company’s unique circumstances.
(2) Themes: A comprehensive set of 14 ESG Themes covers key areas across the ESG spectrum. Themes are assessed for their relevance (materiality) to an individual company and then all indicators within the relevant Themes are scored based on the quality of a company’s management of the underlying issues. If a Theme has greater relevance to a company then they must demonstrate stronger management of the underlying issues within that Theme to achieve a higher score.
(3) Pillars: The 3 Pillars cover the core components of the ESG Rating (i.e. E, S & G). Pillars represent a cumulative, materiality-weighted score of the underlying Theme scores and as such also reflect the relevance of underlying issues to each company.
(4) ESG Rating: The final ESG Rating aggregates the Pillar scores into a single, numeric ESG Rating from 0-5. This Rating provides a measure of the overall quality of a company’s management of ESG issues.
Additional information on our ESG Ratings and data model is available here: http://www.ftserussell.com/financial-data/sustainability-and-esg-data/esg-ratings