ISS ESG, the sustainable investment arm of Institutional Shareholder Services (ISS), recently released methodology updates to its Governance QualityScore. These updates are part of a comprehensive expansion of Governance QualityScore and include the introduction of 8 new factors applicable to US companies. ISS ESG also announced a data verification period from November 11 to 22, 2024, during which companies may verify and submit changes to their data on all factors (including the new factors) before scores are released under the new methodology.
The 8 new factors applicable to US companies, which are set forth below, cover information security, CEO compensation, and shareholder meetings.
New Compensation Factors:
- What is the disclosed ratio of the CEO total compensation to total compensation of employees?
- What is the basis of the disclosed ratio of the CEO total compensation to total compensation of employees?
New Shareholders Rights Factors:
- Does the company allow physical meeting participation?
New Audit & Risk Oversight Factors:
- Does the company disclose the role of the management in overseeing information security risks?
- Does the company disclose the role of the board in overseeing information security risks?
- Does the company have a third-party information security risk management program?
- Does the company leverage a third-party assessment of information security risks?
- What is the Data Protection Officer reporting line?
Governance QualityScore is a scoring and screening solution for institutional investors designed to enable the review of a company’s corporate governance across four key areas: Board Structure, Compensation, Shareholder Rights, and Audit &Risk Oversight. Each company under Governance QualityScore coverage is compared against all other companies within its region and is assigned a score ranging from 1 to 10, with lower scores indicating higher quality and relatively lower governance risk as compared to other companies within the region.
