Dow Jones launches news-informed ESG ratings

By Christine Dawson

Dow Jones has launched a sustainability rating that uses daily news sentiment and scoring updates as well as company-disclosed data.

The sustainability score for 6,000 publicly traded companies is generated from an evaluation across 26 sustainability categories and input from positive and negative news stories from thousands of news sources globally.

General manager of Dow Jones Newswires, Joe Cappitelli, said this addresses the time issue where it might take another provider up to a year for a news event to be absorbed in to an ESG score.

The root of the story

Cappitelli explained as well as automated elements and machine learning there are researchers who will look in to score changes caused by news data: “Let’s say there is a big move in a score. The researcher will… make sure that is correct. They will even go so far as to call the company where necessary.”

The general manager said the process was rigorous and thorough “and different from what you would get from many places that are creating scores. We are playing to our strengths as an editorial and objective and trustworthy organisation.”

Score transparency, Cappitelli said, comes from being able to trace the end result back to the articles that influenced it and share that with clients.

He also pointed to the flexibility of the product – for example if a client wanted to include Sustainability Accounting Standards Board (SASB) materiality in the score they can but there is the option to exclude it if preferred.

Although focused on the asset management sector initially, Cappitelli said the offering – developed with ESG data and technology provider Arabesque S-Ray – may eventually broaden out to other groups.

“For example, financial advisers and wealth managers, they are going to be looking to serve their clients with investments and portfolios and advice so they can meet this need [for sustainability] and way of thinking from an investment perspective,” he said.

See also:- All Street CEO: There is plenty of ESG data

Glenn Hall, editor, Professional News at Dow Jones said the current wave of policy and regulatory changes in sustainable investment is driving demand for better data.

“As investors navigate these changes and increasingly consider more nonfinancial factors, they need a robust and dynamic way of evaluating how well companies are managing the impact they may have on people and the planet.

“Our vast news and data offering gives asset managers the facts and insights they need to more effectively manage their portfolios and stay ahead of new regulatory requirements,” said Hall.