TheCorporateCounsel.net

Here’s a post I recently shared on our Proxy Season Blog for members of this site:

Since their launch, the ISS Environmental and Social (E&S) Disclosure QualityScores have been a source of heartburn for many companies. With their placement in ISS’s well-reviewed and highly-anticipated proxy reports, boards and management teams can’t help but focus on them, even in cases where other ESG ratings—like MSCI and Sustainalytics—may be used more by investors.

ISS recently announced that it plans a comprehensive update to the E&S Disclosure QualityScore scoring methodology in the third quarter. Here’s more info on what’s coming:

More than 150 factors will be revised for greater relevance, close to 50 factors retired, and more than 60 new factors will be added. These additions are driven by the expansion of current disclosure coverage and the addition of new material topics. As a result of this methodology update, the Environmental & Social Disclosure QualityScore will be supported by 360 comprehensive and refined factors. The update will also include a review of the model’s materiality assessment, comprising an adjustment of category and factor-specific weights to better capture the depth and the extent of disclosure. Issuers within the coverage universe will have an opportunity to verify the new data in July prior to which ISS ESG will provide more granular details on the nature and scope of the planned enhancement.

– Meredith Ervine