ISS ESG has launched Sustainability Bond Rating that gives investors a sustainability impact and risk assessment at the issuance level for sustainability bonds.

The bonds covered are green, social, or sustainability, along with sustainability-linked (GSSS+) bonds, issued by both corporate and sovereign entities.

The rating is applied across issuance types, Use of Proceeds Bonds (UoP) and Sustainability-Linked Bonds (SLB) and made up of three dimensions – Alignment with International Standards, Environmental and Social Impact Assessment and the Issuer’s Sustainability Strategy. Each dimension is subdivided into topics and further broken down into indicators. For all layers of the rating hierarchy – the overall rating, dimensions, and topics – there are aggregated scores based on the underlying indicator assessments. Drawing on a pool of approximately 400 indicators, an average of approximately 150 indicators per bond are evaluated based on the specific rating structures for each issuance type.

The new Sustainability Bond Rating assesses alignment with established international standards and guidelines on labelled bonds, such as those by the International Capital Market Association (ICMA), as well as alignment with the United Nations (UN) Sustainable Development Goals (SDGs). Its rating measures absolute performance using a 12-point grading scale from A+ (excellent performance) to D- (poor performance).

Till Jung, Head of ESG at ISS STOXX, said, “The volume and complexity of labeled bond issuances has increased significantly in recent years, against a backdrop of disparate regulatory and market reporting standards. Our new, differentiated offering addresses investors’ key need for comparative insights on the material sustainability risks and opportunities of a labeled bond at issuance level. This is significant as it is not just building an assessment based purely on general elements from the issuer’s activities and performance.”

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