How to Research ESG Stocks & Funds
Many companies are self-reporting their ESG progress and commitments in their annual reports and often in dedicated reports on sustainability.
For a more independent view, several firms provide information on disclosures. Here are 4 resources you can use when getting started on your ESG and sustainable investing journey.
- CDP is a non-profit that puts pressure on companies to disclose data to measure and understand their environmental impact. The website allows you to see what many public companies have and have not disclosed.
- MSCI is one of the most comprehensive ESG data providers and is often a key element in the arsenal of forward-thinking financial planners. Their most powerful tools come with high subscription costs, but individual company ratings are available to all on their website. MSCI also provides similar information on ESG-focused funds.
- You can also leverage insights from Sustainalytics, which measures a company’s risk exposure and offers “ESG Risk Ratings” for the financial industry on a subscription basis and provides a free company-by-company lookup tool for individual investors — similar to MSCI. Sustainalytics also has helpful videos breaking down its methodology and focus on providing tools to measure risk.
- Another resource worth utilizing is S&P Global’s ESG metrics. As with Sustainalytics and MSCI, you can search for ESG ratings of individual companies. Ratings are based on companies’ responses to a questionnaire. S&P Global provides three additional sub-scores for each component of ESG, which can give you more information on the balance of activities that go into the full score.