ISS Launches Sustainability Bond Rating: Elevate Your Green Investment Decisions!
Institutional Shareholder Services (ISS) has unveiled its latest initiative—the Sustainability Bond Rating—through its ISS STOXX division. This innovative rating system offers a comprehensive assessment of bonds classified under green, social, sustainability, and sustainability-linked categories (GSSS+), effectively catering to both corporate and sovereign issuers.
The Need for a Sustainability Bond Rating
As the market for labeled bonds expands and evolves, the demand for standardized assessments becomes increasingly critical. The Sustainability Bond Rating addresses this need by providing investors with valuable insights into the sustainability risks and opportunities associated with individual bond issuances.
Key Features of the Sustainability Bond Rating
- Issuance-Level Analysis: Unlike general assessments based on issuer performance, this rating focuses specifically on the bond issuance itself.
- Support for Diverse Investor Needs: The rating aids in risk management, compliance with reporting standards, and the selection of securities that align with sustainability strategies.
- Alignment with Regulatory Standards: The Sustainability Bond Rating adheres to international guidelines set by the International Capital Market Association (ICMA) and the United Nations Sustainable Development Goals (SDGs).
Rating System Overview
The rating system employs a 12-point grading scale, ranging from A+ (excellent) to D- (poor), evaluating approximately 400 indicators. These indicators assess three main dimensions:
- Alignment with International Standards
- Environmental and Social Impact Assessment
- Issuer’s Sustainability Strategy
Benefits for Investors
The Sustainability Bond Rating is designed to enhance transparency and improve decision-making in the realm of sustainable investments. Key benefits include:
- Verification of external framework certifications for labeled bonds.
- Identification of bonds relevant to specific sustainability strategies.
- Facilitation of impact investing by allowing investors to track the allocation of bond proceeds and verify impact targets throughout the bond’s lifecycle.
Future Implementation
ISS STOXX plans to distribute the Sustainability Bond Rating via various platforms, including data feeds and APIs, ensuring seamless integration for clients. This new tool is set to transform how investors assess the sustainability of bond investments, providing essential insights into their risks and impacts.
For more information on sustainable investment practices, visit our Sustainable Investment page.
