ESG impacts both tangible assets and intangible capital of a company. Materiality is defined and assessed in order to identify key issues, risks and opportunities significant for both companies and their stakeholders.   Those ESG issues that are ignored or not managed properly can adversely impact company accounts. The issues are related to the stakeholders’ interests. 

The Vigeo-Eiris approach to research recognises that the challenges faced by companies are numerous and not uniform. The research framework is therefore customised per sector to reflect and capture the specific materiality of ESG risks and opportunities within each defined sector.   

Capturing Materiality: Methodology for Weighting Criteria 
The ‘weighting’ to determine the materiality of each sustainability criterion is set on a scale from 0 to 3 and is based on an assessment of three factors that analyse both issuers and stakeholders:  
• The nature of the stakeholders’ rights, interests and expectations; taking stakeholder relevance into account. 
• The vulnerability of stakeholders to the impact of these three factors.  
• The risks that an issuer may face (e.g. legal, operational, human capital, reputational, etc.)  should they fail to adequately manage this impact. 

This exercise is conducted by Vigeo-Eiris sector specialist research teams under the direction of their Research Manager. 

Materiality in a Vigeo-Eiris Framework and Scores:  
• Review of  38 sustainability criteria in our generic research framework.  
• At sector level, each criterion is assigned a weight from 0-3 following the method outlined above. 
• A criterion with a weight of 0 will not be considered as material for analysis and will be removed from the framework. 
• A criterion with a weight of 3 has the highest weight and is therefore considered the most material.  
• Vigeo Eiris currently has 38 sector-specific customised rating models, and on average, 20-25 criteria are analysed per sector for each company. For example, for the Pharmaceutical and Biotechnologies sector we have 24 active criteria. 
Since the consolidated scores are built on the weighted average of the performance in these criteria, the scores consider the performance of the issuer on the most material issues.
        

          In order to provide information about controversies and events of companies. Vigeo Eiris  research includes data from 10,000 media sources and input from NGOs and other Social and environmental organisations.
        

          At the beginning of 2019  Vigeo-Eiris research methodologies and processes was certified with ISO 9001 . 
Vigeo-Eiris continues to place the highest emphasis on the quality of its research and is committed to the accurate, timely and impartial assessment of all issuers, states and local authorities within its universe.  
Vigeo Eiris ensures the quality of its ESG and Specialised Research process and products by: 
1. Investing in its team of skilled ESG and Specialised Analysts/Researchers:  
   - recruiting analysts with comprehensive academic backgrounds in CSR and Responsible Investment, as well as good analytical skills  
   - providing these analysts/researchers with a thorough induction process and regular development throughout their careers  
2. Conducting regular internal quality controls and audits on the research process and on the final products, both before and after delivery to clients. Quality controls and audits involve a range of people from different services and take place at different stages: 
    -  Sector Leaders, Research and Product Managers perform quality controls during the rating process, and before the delivery of products to clients. Such controls aim to: 
 ensure that scores and opinions are in line with the Agency’s methodology; 
 ensure that the agreed rating process has been adhered to for all rated issuers, states and local authorities.  
    - Thematic Groups support Sector Leaders to ensure comprehensive sector customisation;  
    - Internal quality auditors conduct random quality checks and audits (outside of the rating process) to ensure that agreed processes and policies are adhered to. 
    - A specific team composed of IT, sales staff and research analysts performs monthly quality checks on data and publications prior to delivery to clients.  
    - Sales and Business Line Managers provide feedback from clients and prospects on the methodology and products. 
3. Continually improving its Quality Management System. Feedback from internal quality checks and audits as well as from clients is shared with the relevant teams (ESG Research department, Specialised Research department, Methodology and Process Managers, etc.) and products, methodologies, and/or processes are reviewed and updated as necessary. 
VE Connect is an online platform that interacts with rated issuers, states and local authorities. This unique platform allows Vigeo-Eiris to share key rating results with rated organisations, enabling continual improvement. It also guarantees the traceability of all communications between the analysts, rated organisations and stakeholders.