ESG & Sustainable Investing: Complete Beginner's Guide

Module 5: ESG Ratings and Frameworks

Learning Objectives

By the end of this module, you will be able to:

• Understand how ESG rating agencies work and what they measure
• Explain why different agencies give different ratings to the same company
• Navigate major ESG reporting frameworks (GRI, SASB, TCFD, ISSB)
• Read and interpret corporate sustainability reports
• Identify the limitations and challenges of current ESG data
• Access free and paid ESG research resources
• Critically evaluate ESG ratings and disclosures

---

5.1 The ESG Ratings Landscape

What Are ESG Ratings?

ESG ratings are assessments of companies' environmental, social, and governance performance, similar to how credit ratings evaluate creditworthiness. They help investors quickly compare companies' ESG performance and identify leaders and laggards.

Key Purpose: Translate complex ESG information into simplified scores that investors can use in decision-making.

The Challenge: Unlike financial accounting (which follows standardized rules), ESG measurement is still evolving. Different rating agencies use different methodologies, focus on different issues, and often reach different conclusions about the same company.

Major ESG Rating Agencies

MSCI ESG Ratings

• Scale: AAA (best) to CCC (worst)
• Coverage: Thousands of companies globally
• Approach: Assesses ESG risks and opportunities material to each industry
• Widely Used: By institutional investors and index providers

Sustainalytics (Morningstar)

• Scale: 0-100 ESG Risk Rating (lower is better—measures unmanaged ESG risk)
• Coverage: 14,000+ companies
• Approach: Focuses on financially material ESG risks
• Integration: Built into Morningstar investment research

Refinitiv (LSEG) ESG Scores

• Scale: 0-100 (higher is better)
• Coverage: 11,000+ companies
• Approach: Measures ESG performance based on publicly reported data
• Strength: Extensive data points and transparency metrics

ISS ESG

• Scale: 1-10 (decile rankings, 1 is best)
• Coverage: Thousands of companies
• Approach: Combines ESG performance and controversies
• Use: Proxy advisory services and governance ratings

Bloomberg ESG Disclosure Scores

• Scale: 0-100 (higher is better)
• Coverage: Public companies
• Approach: Measures extent and quality of ESG disclosure
• Note: Disclosure score, not performance rating

S&P Global ESG Scores

• Scale: 0-100 (higher is better)
• Coverage: 7,500+ companies
• Approach: Assesses corporate sustainability based on publicly available data
• Integration: Into S&P Dow Jones Indices

CDP (Carbon Disclosure Project)

• Scale: A to D- for climate, water, and forests
• Coverage: Companies that voluntarily disclose
• Approach: Environmental disclosure and performance
• Strength: Deep environmental data

How Rating Agencies Assess ESG

Data Collection:

• Public company disclosures (sustainability reports, SEC filings, websites)
• Third-party data sources (news, NGO reports, government data)
• Direct company questionnaires (sometimes)
• Controversy monitoring (media, lawsuits, incidents)

Analysis Process:

1. Identify material ESG issues for the industry
2. Collect relevant data for each company
3. Assess performance on each issue
4. Weight issues by materiality
5. Compare to industry peers
6. Incorporate controversies and incidents
7. Generate overall score/rating

Scoring Components (varies by agency):

• Performance: How well the company manages ESG issues
• Disclosure: Quality and transparency of ESG reporting
• Controversies: Negative incidents and scandals
• Exposure: How much the company is exposed to ESG risks
• Management: Quality of ESG policies and systems

---

5.2 Why Ratings Disagree: The ESG Rating Puzzle

The Problem

A company might receive these ratings simultaneously:

• MSCI: AA (strong performance)
• Sustainalytics: Medium risk
• Refinitiv: 65/100 (above average)
• ISS: 4/10 (slightly below average)

Same company, same time period, wildly different assessments. Why?

Reason 1: Different Methodologies

What They Measure Differs:

• Some rate ESG performance (how well the company does)
• Others rate ESG risk (how much unmanaged ESG risk remains)
• Some focus on disclosure (transparency and reporting quality)
• Others emphasize impact (effect on environment and society)

Example: A company might have excellent disclosure (high Bloomberg score) but mediocre actual performance (average MSCI rating) and high residual risk (higher Sustainalytics number).

Reason 2: Different Issue Selection

Agencies Don't Agree on What Matters:

• One agency might prioritize carbon emissions heavily
• Another might weight labor practices more
• A third might emphasize governance most

Example: A tech company with excellent governance but average diversity scores might rank highly with governance-focused raters but lower with diversity-focused ones.

Reason 3: Different Weighting Schemes

Even when measuring the same issues, agencies weight them differently:

• Agency A: Carbon emissions = 30% of environmental score
• Agency B: Carbon emissions = 10% of environmental score

Same performance, different weights = different ratings

Reason 4: Different Peer Comparisons

Industry Classification Matters:

• Some agencies use broad sectors
• Others use narrow sub-industries
• Company might look good compared to entire sector but poor compared to direct peers

Example: An oil company might score well compared to other oil companies (peer-relative approach) but poorly on an absolute basis compared to all industries.

Reason 5: Different Data Sources and Quality

Data Availability Varies:

• Agencies use different data sources
• Some rely primarily on company disclosures
• Others incorporate third-party information more heavily
• Data gaps are filled with estimates or assumptions

Example: One agency might have detailed supply chain labor data; another might estimate it, leading to different conclusions.

Reason 6: Controversy Treatment

Scandals and Incidents Affect Ratings Differently:

• Some agencies heavily penalize controversies
• Others treat them as one factor among many
• Timing differs (how long negative events affect ratings)
• Severity interpretation varies

Example: After an environmental incident, one agency might downgrade immediately and severely; another might wait to see remediation before adjusting.

Reason 7: Transparency vs. Performance

The Disclosure Paradox:

• Companies disclosing problems might be rated worse than companies hiding them
• Transparent poor performance can score lower than opaque unknown performance
• Some agencies reward disclosure; others penalize revealed problems

Example: Company A discloses high emissions and reduction plan; Company B doesn't report. Company A might score lower despite being more transparent and working on the issue.

What This Means for Investors

Don't Rely on a Single Rating: Use multiple sources to get a fuller picture.

Understand What Each Rating Measures: Know if you're looking at risk, performance, disclosure, or impact.

Look Beyond the Score: Read the underlying data and rationale, not just the letter grade.

Consider Trends: Is the rating improving or declining over time? That may matter more than absolute level.

Focus on Material Issues: What ESG factors matter most for this specific company/industry? Look at those directly.

Use Ratings as Starting Points: ESG ratings are screening tools, not final answers. They point you to areas needing deeper investigation.

---

5.3 Major ESG Reporting Frameworks

Companies report ESG information using various frameworks. Understanding these helps you navigate sustainability reports and know what to expect.

GRI (Global Reporting Initiative)

What It Is: The world's most widely used sustainability reporting framework.

Approach:

• Comprehensive, detailed disclosure standards
• Covers wide range of ESG topics
• Stakeholder-inclusive approach (not just investors)
• Modular structure—companies report on material topics

Structure:

• Universal Standards (apply to all companies)
• Topic-specific Standards (environmental, social, governance)
• Sector Standards (industry-specific guidance)

Strengths:

• Comprehensive and detailed
• Widely adopted globally
• Stakeholder focus beyond just investors
• Regular updates and improvements

Limitations:

• Can be overwhelming (hundreds of potential metrics)
• Not specifically designed for investment decisions
• Flexibility can reduce comparability

When Companies Use It: Comprehensive sustainability reports aimed at multiple stakeholder groups.

SASB (Sustainability Accounting Standards Board)

What It Is: Industry-specific standards focused on financially material ESG issues for investors.

Approach:

• Identifies 3-8 material sustainability issues per industry
• Provides specific metrics for each issue
• Designed for investor decision-making
• Integrated into financial filings

Structure:

• 77 industry standards across 11 sectors
• Each standard identifies material topics and metrics
• Disclosure topics tied to financial impact

Strengths:

• Investor-focused (financially material issues)
• Industry-specific (relevant metrics per sector)
• Concise (focuses on what matters most)
• Designed for integration into SEC filings

Limitations:

• US-focused initially (though expanding)
• Doesn't cover all stakeholder concerns
• Narrower than GRI

When Companies Use It: Annual reports, 10-K filings, investor communications.

Example: For the Technology & Communications sector, SASB identifies issues like data privacy, energy management, hardware product lifecycle, and employee diversity. For the Oil & Gas industry, it focuses on emissions, water management, community relations, and reserves valuation.

TCFD (Task Force on Climate-related Financial Disclosures)

What It Is: Framework specifically for climate-related financial risk disclosure.

Approach:

• Four core elements: Governance, Strategy, Risk Management, Metrics & Targets
• Focuses on climate as financial risk
• Scenario analysis encouraged

The Four Pillars:

1. Governance: Board and management oversight of climate risks and opportunities

2. Strategy: Climate impacts on business, strategy, and financial planning

• Physical risks (extreme weather, sea level rise)
• Transition risks (policy, technology, market changes)
• Opportunities (resource efficiency, new products/markets)
• Scenario analysis (2°C warming, different carbon price scenarios)

3. Risk Management: How climate risks are identified, assessed, and managed

4. Metrics and Targets:

• Scope 1, 2, and 3 emissions
• Climate-related risks and opportunities
• Targets for managing climate issues

Strengths:

• Specifically addresses climate (the most pressing environmental issue)
• Investor-focused
• Increasingly mandatory in many jurisdictions
• Emphasizes forward-looking scenario analysis

Limitations:

• Only covers climate (not broader environmental or social issues)
• Scenario analysis is complex and often poorly executed
• Scope 3 emissions remain challenging

When Companies Use It: Climate sections of sustainability reports, standalone TCFD reports, integrated reports.

ISSB (International Sustainability Standards Board)

What It Is: New global baseline for sustainability disclosure, consolidating and building on existing frameworks.

Background:

• Created by IFRS Foundation (same body that sets international accounting standards)
• Aims to create what IFRS did for financial reporting but for sustainability
• Incorporates SASB standards and TCFD recommendations

Standards:

• IFRS S1: General Requirements for Disclosure of Sustainability-related Financial Information
• IFRS S2: Climate-related Disclosures

Approach:

• Globally consistent
• Investor-focused (financially material information)
• Builds on TCFD and SASB
• Interoperable with GRI (can use both together)

Significance:

• Likely to become global standard for investor-focused ESG disclosure
• Multiple jurisdictions adopting or aligning with ISSB standards
• Reduces fragmentation in sustainability reporting

Timeline: Standards finalized in 2023; adoption accelerating 2024-2026.

What This Means: Over the next few years, expect more companies to report using ISSB standards, creating greater consistency and comparability for investors.

CDP (formerly Carbon Disclosure Project)

What It Is: Environmental disclosure platform and rating system.

Focus Areas:

• Climate change
• Water security
• Forests (deforestation)

Approach:

• Annual questionnaires sent to companies
• Voluntary disclosure (though investor and customer pressure drives participation)
• Scoring from A to D-
• Data publicly available

Strengths:

• Deep environmental data
• Long history (20+ years)
• Large participant base (18,000+ companies)
• Free data access

When Companies Use It: Responding to CDP questionnaires, referencing CDP scores in reporting.

Integrated Reporting

What It Is: Reporting approach combining financial and non-financial information into single report.

Philosophy: Show how ESG factors create or destroy value over time, connecting sustainability to financial performance.

Framework: International Integrated Reporting Council (IIRC) framework, now merged into the IFRS Foundation.

Strengths:

• Holistic view of value creation
• Breaks down silos between financial and sustainability reporting
• Forward-looking and strategic

Challenges:

• Complex to implement well
• Not widely adopted yet
• Requires significant organizational change

How to Navigate Multiple Frameworks

For Investors:

• Looking for investor-focused, material information? → Start with SASB/ISSB and TCFD
• Want comprehensive stakeholder view? → Look at GRI reports
• Focused on environmental/climate issues? → Check CDP scores and TCFD disclosures
• Seeking integrated picture? → Look for integrated reports

The Trend: Convergence toward ISSB as global baseline, with companies potentially using GRI for additional stakeholder information and TCFD/CDP for climate detail.

---

5.4 Reading Corporate Sustainability Reports

What Sustainability Reports Include

Typical Structure:

1. Letter from CEO/Leadership: Vision, strategy, highlights
2. About This Report: Scope, reporting boundaries, frameworks used
3. Company Overview: Business description, operations, value chain
4. Materiality Assessment: Key ESG issues for the company
5. Environmental Performance: Energy, emissions, water, waste, biodiversity
6. Social Performance: Employees, diversity, safety, community, supply chain, customers
7. Governance: Board, ethics, compliance, risk management
8. Data Tables: Detailed metrics and KPIs
9. Assurance Statement: Third-party verification (if applicable)
10. Indexes: GRI content index, SASB index, etc.

How to Read Critically

Start with Materiality:

• What does the company identify as its material ESG issues?
• Does this align with your understanding of the industry?
• Are they addressing the issues that matter most?

Look for Metrics, Not Just Stories:

• Compelling narratives are nice, but numbers matter
• Are specific, quantitative metrics provided?
• Is performance improving or declining?
• How does it compare to industry benchmarks?

Check the Boundaries:

• What's included in the report? (e.g., all operations or just some?)
• Are acquisitions included?
• Is the value chain covered (especially Scope 3 emissions and supply chain)?

Examine Targets and Progress:

• Has the company set specific, time-bound targets?
• Are they on track to meet them?
• What happens if targets are missed?
• Are targets ambitious or easy to achieve?

Look for Third-Party Assurance:

• Is the data verified by independent auditors?
• What scope of assurance? (Limited or reasonable?)
• Who provides assurance? (Big 4 accounting firm, specialist consultant?)

Watch for Greenwashing Signals:

• Vague claims without supporting data
• Cherry-picking positive data while hiding negatives
• Focusing on minor initiatives while ignoring major impacts
• Aspirational commitments without concrete action plans
• Pictures of nature and green imagery without substance

Year-Over-Year Comparison:

• Don't just read this year's report
• Compare to prior years
• Is the company improving or backsliding?
• Are they consistent or constantly changing metrics?

Contextualize the Data:

• Absolute numbers vs. intensity metrics (emissions per unit of revenue/production)
• Company growth affects absolute numbers
• Industry comparisons matter

Key Sections to Focus On

Materiality Matrix/Assessment:

• Shows which issues the company (and stakeholders) consider most important
• Should guide your analysis priorities
• If major issues are missing, that's a red flag

Data Tables:

• Often buried at the end but contain crucial information
• Multi-year trends
• Detailed breakdowns by geography, business unit, etc.
• Look for footnotes explaining data (exclusions, methodologies)

Forward-Looking Statements:

• Targets and commitments
• Risk assessments
• Investment plans
• Strategy for managing ESG issues

Controversies and Challenges:

• How does the company address problems?
• Transparent about difficulties or defensive?
• What remediation plans exist?

Red Flags in Sustainability Reports

Warning Signs:

• No quantitative data, just qualitative statements
• Selective disclosure (only positive data)
• Lack of year-over-year comparison
• Changing metrics frequently (prevents trend analysis)
• No third-party assurance
• Vague targets without clear timelines or accountability
• Reporting on inputs ($ spent on sustainability) not outputs (actual impact)
• Excessive length obscuring key issues
• Report focused on minor initiatives while ignoring major impacts

Green Flags in Sustainability Reports

Positive Indicators:

• Clear, specific, quantitative metrics
• Multi-year trends showing progress
• Comprehensive scope (including value chain)
• Third-party assurance
• Alignment with recognized frameworks (GRI, SASB, TCFD)
• Transparent about challenges and setbacks
• Science-based targets
• Executive compensation tied to ESG metrics
• Consistent methodology over time
• Balanced coverage of positive and negative aspects

---

5.5 The Data Challenge

Current Limitations of ESG Data

Inconsistent Disclosure:

• Not all companies report ESG data
• Those that do use different frameworks and metrics
• Difficult to compare across companies
• Voluntary nature means gaps and inconsistencies

Self-Reported Information:

• Most ESG data is provided by companies themselves
• Limited third-party verification
• Potential for selective disclosure or bias
• "Teaching to the test" (optimizing for ratings vs. actual performance)

Lack of Standardization:

• No single global standard (though ISSB is working on this)
• Different methodologies for calculating the same metric
• Varying reporting boundaries and scopes
• Industry classification differences

Data Quality Issues:

• Estimates and assumptions common (especially Scope 3 emissions)
• Historical data often unavailable (short reporting history)
• Acquisitions and divestitures complicate trend analysis
• Data errors and inconsistencies

Scope 3 and Value Chain Challenges:

• Most companies' largest impacts are in Scope 3
• Extremely difficult to measure
• Relies on supplier data (often unavailable)
• Full value chain visibility is rare

Timeliness:

• Sustainability reports typically lag financial reporting
• Data might be 1-2 years old by publication
• Rapidly changing situations not reflected

Forward-Looking Information:

• Much ESG data is backward-looking (historical performance)
• Investors need forward-looking risk assessment
• Scenario analysis and projections are limited

The Regulation Response

Increasing Mandatory Disclosure:

• EU: Corporate Sustainability Reporting Directive (CSRD) requiring extensive ESG disclosure
• US: SEC proposed climate disclosure rules
• UK: TCFD-aligned disclosure requirements
• Global: Growing regulatory requirements

Benefits of Regulation:

• More companies required to disclose
• Standardized formats improve comparability
• Third-party assurance requirements
• Penalties for non-compliance or misrepresentation

Challenges:

• Different jurisdictions have different rules
• Compliance costs, especially for smaller companies
• Implementation timelines vary
• Risk of regulatory fragmentation

The Trend: Movement toward mandatory, standardized, assured ESG disclosure globally, with ISSB standards as likely global baseline.

---

5.6 Accessing ESG Information

Free Resources

Company Sources:

• Sustainability Reports: Company investor relations or sustainability pages
• Annual Reports/10-K: Increasing ESG disclosure in financial filings
• Proxy Statements (DEF 14A): Governance and compensation details
• Company Websites: ESG sections, policies, targets

ESG Rating Previews:

• MSCI: Limited free access to ratings
• Sustainalytics: Some free company profiles
• Yahoo Finance: Displays ESG scores on stock pages
• Bloomberg: Limited ESG data on free terminals

Disclosure Platforms:

• CDP: Free access to company climate, water, forests disclosure
• GRI Database: Searchable database of sustainability reports
• SASB Navigator: Free tool to understand material issues by industry

Research and News:

• Company announcements and press releases
• Financial news coverage of ESG issues
• NGO reports (Amnesty International, Greenpeace, etc. on specific issues)
• Think tanks (Ceres, Principles for Responsible Investment)

Regulatory Filings:

• SEC EDGAR: US public company filings
• International equivalents: UK Companies House, SEDAR (Canada), etc.

Academic Research:

• Google Scholar: Academic papers on ESG performance
• University research centers: Many publish free ESG research

Paid Resources

ESG Rating Platforms (typically institutional):

• MSCI ESG Research: Comprehensive ratings and analytics
• Sustainalytics: Risk ratings and research
• Refinitiv: ESG data and scores
• S&P Global ESG: Scores and research
• ISS ESG: Governance and ESG ratings

Financial Data Providers:

• Bloomberg Terminal: Extensive ESG data and analytics
• Refinitiv Eikon/Workspace: ESG metrics and news
• FactSet: ESG data and research

Specialized Research:

• Proxy Insight: Shareholder proposal tracking and governance data
• RepRisk: ESG risk and controversy monitoring
• TruValue Labs: AI-driven ESG insights from unstructured data

ETF and Fund Providers:

• Many provide free ESG fund screening tools and research
• Morningstar sustainability ratings for funds

How to Build Your Own ESG Research Process

Step 1: Start with Company Disclosures

• Read the latest sustainability report
• Review SASB/TCFD sections in annual report
• Check CDP disclosures
• Review proxy statement for governance

Step 2: Check ESG Ratings

• Look up company on free rating previews
• Note the rating level and any trend
• Understand what's driving the rating

Step 3: Review Controversies

• Google search: "[company name] ESG controversy"
• Check news over past 2-3 years
• Look for patterns of issues
• Assess company responses

Step 4: Compare to Peers

• Identify 3-5 direct competitors
• Compare their ESG metrics and ratings
• Understand relative performance

Step 5: Assess Materiality

• Use SASB Materiality Finder to identify material issues for the industry
• Focus your analysis on those issues
• Don't waste time on immaterial factors

Step 6: Synthesize

• What's your overall ESG assessment?
• Major strengths and weaknesses?
• Key risks and opportunities?
• Trend improving or declining?
• How does this affect your investment decision?

---

5.7 The Future of ESG Data and Ratings

Where Things Are Heading

Greater Standardization:

• ISSB standards becoming global baseline
• Mandatory disclosure expanding
• Regulatory convergence (hopefully)

Better Quality and Assurance:

• Third-party verification becoming standard
• Audit requirements expanding
• Technology improving data collection and verification

Enhanced Disclosure:

• More forward-looking information
• Better Scope 3 and value chain data
• Scenario analysis and climate risk assessment
• Integration with financial reporting

Technology and Innovation:

• Satellite Data: Monitoring emissions, deforestation, water use from space
• AI and Machine Learning: Analyzing unstructured data (news, reports, social media) for ESG signals
• Blockchain: Supply chain transparency and verification
• IoT Sensors: Real-time environmental monitoring

Consolidated Ratings:

• Potential for rating convergence as data standardizes
• Better understanding of what different ratings measure
• More transparency in rating methodologies

Expanded Coverage:

• Private companies and SMEs
• Emerging markets
• Complete value chains
• Broader set of ESG issues (biodiversity, nature, social metrics)

Challenges Ahead

Data Overload:

• More disclosure can mean more complexity
• Need for tools to synthesize information
• Risk of focusing on reporting over performance

Greenwashing 2.0:

• As disclosure becomes mandatory, sophistication of greenwashing may increase
• Companies learning to optimize for ratings vs. actual performance
• Need for critical analysis remains

Materiality Debates:

• Ongoing disagreement about what's financially material
• Tension between investor-focused and stakeholder-focused disclosure
• "Double materiality" (company impact on world AND world impact on company)

Cost and Access:

• Best data and tools remain expensive
• Retail investors at disadvantage vs. institutions
• Need for democratization of ESG information

---

Module 5 Summary

Let's consolidate your learning on ESG ratings and frameworks:

Rating Complexity: Multiple ESG rating agencies exist, each with different methodologies, focus areas, and weighting schemes—explaining why ratings often disagree.

Understanding Disagreement: Ratings differ because agencies measure different things (risk vs. performance), use different data, weight issues differently, and treat controversies differently.

Multiple Frameworks: Companies report using various frameworks—GRI (comprehensive), SASB (investor-focused, material), TCFD (climate), ISSB (emerging global baseline).

Critical Reading: Sustainability reports require critical analysis—focus on metrics over narratives, check boundaries, examine targets, look for assurance, and watch for greenwashing.

Data Limitations: Current ESG data faces challenges—inconsistent disclosure, self-reporting, lack of standardization, Scope 3 difficulties, and quality issues.

Information Access: Free resources exist (company reports, CDP, limited ratings) alongside paid platforms. Investors can build DIY research processes.

Future Trends: Movement toward standardization (ISSB), mandatory disclosure, better assurance, technology-enabled verification, but challenges remain.

Key Insight: ESG ratings and reports are tools, not final answers. Use them to identify areas for deeper investigation, understand what they measure, and always think critically.

You now have the frameworks, tools, and critical thinking skills to access and evaluate ESG information. This prepares you for Module 6, where we'll explore different sustainable investing strategies and how to implement them.

---

Module 5 Review Questions

Test your understanding:

1. Name three major ESG rating agencies and explain how their approaches differ.

2. Why do ESG rating agencies often give different ratings to the same company? List at least three reasons.

3. What are the key differences between GRI, SASB, and TCFD frameworks?

4. What is the ISSB and why is it significant for the future of ESG reporting?

5. What are five red flags to watch for when reading a company's sustainability report?

6. What are the main limitations of current ESG data?

7. How can retail investors access ESG information without expensive subscriptions?

Reflection Questions:

• If you could only look at one ESG information source for an investment decision, which would it be and why?
• How much should investors rely on ESG ratings vs. conducting their own analysis?
• What improvements in ESG data and disclosure would be most valuable for investors?

---

Practical Exercise: ESG Information Deep Dive

Choose a publicly traded company you're interested in analyzing.

Complete the following research:

1. Find and review the company's latest sustainability report
2. Identify which reporting frameworks it uses (GRI, SASB, TCFD, etc.)
3. Look up the company's ESG ratings from at least two different agencies (use free previews)
4. Compare the ratings—do they agree or disagree? Why might that be?
5. Check CDP for the company's climate disclosure and score
6. Analyze the materiality assessment—what ESG issues does the company identify as most important?
7. Evaluate 3-5 key ESG metrics over a 3-year period—improving or declining?
8. Search for ESG controversies or incidents involving the company
9. Synthesize your findings into an overall ESG assessment

Use sources like:

• Company investor relations website
• CDP website
• Yahoo Finance or similar for ESG rating previews
• Google for controversies
• SASB Materiality Finder for industry context

This exercise builds practical skills in gathering and analyzing real ESG information.

---

Looking Ahead to Module 6

You now understand ESG factors (E, S, G), how they're measured (ratings), and how they're reported (frameworks). Next, we'll explore the practical question: How do you actually invest sustainably?

In Module 6, we'll cover different sustainable investing strategies:

• Negative screening (exclusions)
• Positive screening (best-in-class)
• ESG integration
• Thematic investing
• Impact investing
• Shareholder engagement

You'll learn the pros and cons of each approach, how to choose what fits your goals, and how different strategies can be combined for optimal results.

See you in Module 6!