ISS ESG Launches New Diversity and Governance Equity Indices
Institutional Shareholder Services’ (ISS) responsible investment arm, ISS ESG, announced the launch of new sustainability-themed equity indices, the ISS ESG U.S. Diversity Index and the ISS ESG Governance QualityScore (GQS) Index family. The announcement marks the first proprietary indices provided by the company.
Marija Kramer, Head of ISS ESG, said:
“In keeping with our commitment to deliver to clients cutting-edge and timely responsible investment solutions, we are pleased to break new ground with today’s launch of the first, proprietary ISS ESG indices with the promise of more to come.”
According to ISS ESG, the new investable equity indices are based on the solution provider’s deep well of boardroom and governance data, integrating detailed datasets available for U.S. directors and executives and the firm’s robust methodology for assessing governance practices and risks, globally.
The ISS ESG U.S. Diversity Index is selects constituents exhibiting both broad ethnic and gender representation for board directors and named executive officers (NEOs). Minimum criteria for inclusion include a combined minimum of three distinct ethnically diverse individuals and three distinct women among directors or NEOs, as well as a 35 percent combined minimum of women or ethnically diverse directors. The index includes US companies across a range of market capitalizations, selected from the ISS ESG Director & Executive Diversity dataset. ISS ESG stated that 251 companies currently meet the index requirements, a significant improvement with only 147 that would have qualified three years ago.
The ISS ESG Governance QualityScore Indices are designed to help investors identify large and middle-capitalization companies with strong board structure, compensation, shareholder rights, and audit and risk oversight practices, as well as those aligned with U.N. Global Compact principles. Index selection is based on ISS ESG GQS score, as well as assessments based on ISS ESG’s Norms and Controversial Weapons Research. The indices are available for the U.S., European, and Asia-Pacific (ex-Japan) markets.
Hernando Cortina, Head of Index Strategy at ISS ESG, said:
“This pioneering family of indices fill an important gap in the current index landscape and supports the investment-case for companies with robust governance and diversity practices.”