State Street Global Advisors (SSGA) has produced the R-Factor scoring system, a proprietary ESG ratings methodology.
According to Rakhi Kumar, Head of ESG Investments and Asset Stewardship at SSGA, a lack of transparency of ESG materiality factors and ratings means there are limitations in relying upon any single ESG ratings provider. To address this SSGA has developed the R-Factor scoring system which uses the Sustainability Accounting Standards Board (SASB) Materiality Map, corporate governance codes and data from the four major ESG ratings providers (Sustainalytics, ISS-Oekom, Vigeo-EIRIS, and ISS-Governance). Kumar writes that along with SSGA’s stewardship and investment expertise, this produces a product with a properly transparent scoring methodology. It also gives ESG investors the opportunity to integrate financially material ESG data while incentivizing companies to improve their ESG practices and disclosure in areas that matter.