ESG scores are used for a variety of reasons. “Traditional” ESG scores are not designed to focus on the ESG issues that are relevant to the financial performance of a specific company. Fuel efficiency, for example, has a bigger impact on the bottom line of an airline than it does on an investment bank.
So, rather than adopt a one-size-fits-all approach, Russell Investments has developed a new ESG scoring methodology that reflects the materiality of the issues that are specific to a company and their profitability.
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Key research findings
Not all ESG issues are equal
Our research showed that < 25% of data items in traditional ESG scores were considered material for two thirds of all securities in the Russell Global Large Cap Index universe.