ESG Risk Ratings
Westpac Share Trading has partnered with Sustainalytics to deliver company level ESG Risk Ratings1, making it easier for clients to develop and implement responsible investment strategies.
What are ESG Risk Ratings
ESG Risk Ratings measure the degree to which a company’s economic value is at risk driven by ESG factors or, more technically speaking, the magnitude of a company’s unmanaged ESG risks.
Environmental, Social, and Governance (ESG) is an approach to evaluating businesses that goes beyond the sole focus of shareholder return. Instead, an ESG framework takes into consideration the ecosystem, both internal and external, that businesses operate in and how they affect each other.
The ESG criteria are a set of standards for company’s operations that help you proactively assess potential investments.
The combined ESG score is an overall company score based on the reported information in the Environmental, Social and Governance pillars. It measures to what extent a company’s economic value is potentially at risk from unmanaged ESG factors.
Three pillars of ESG
Environmental relates to the biosphere and ecosystem of our planet, specifically, how human activity affects the natural world. This includes things like:
- Greenhouse gases (GHGs)
- Air pollution
- Energy consumption
- Water consumption
- Waste output
- Nature usage
- Environmental policies
Social encompasses the factors regarding how businesses treat their human stakeholders – both inside and outside the corporation. This includes:
- Comparative living wages
- Diversity and inclusion percentage
- Gender pay gap
- Employee engagement
- Health and safety
- Human rights
- Wealth generation
Governance is about how a corporation operates at the highest-level including decision making, political involvement, and ethics. This includes:
- Executives’ pay ratio
- Quality of governing body
- Ethics and anti-corruption policy
- Tax paid
- Ecosystem ESG
Where to find ESG Risk Ratings
Simply log into your Westpac Share Trading account and navigate to Quotes & Research > Research > Company
Things you should know
1ESG Ratings provided by Sustainalytics. Sustainalytics is a subsidiary of Morningstar Inc.
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