ESG Scores Clients Can Trace to the Policy Behind Them

The provider’s ESG scores came from an incumbent ratings provider it found too expensive to show clients and too opaque to explain. Veridion scored its universe on a documented, criteria-level model: every score decomposes to 26 justified risk criteria across sovereign and corporate holdings, and is judged on what a country or company actually does.

1. 1
   Replaced a costly, opaque feed

   the incumbent’s ESG scores were too expensive to show end-investors and too closed to explain

2. 2
   Ingested the public record

   company disclosures, public-institution and state-owned-enterprise evidence, authoritative indices

3. 3
   Scored 26 criteria per entity

   across environmental, social and governance, outcomes weighted over pledges

4. 4
   Justified every score

   a written, evidence-based rationale behind all 30 score dimensions

5. 5
   Covered the whole book

   sovereign and corporate fixed income, refreshed continuously

6. 6
   Put ESG in front of investors

   transparent and affordable enough to publish, the use the incumbent had blocked

Paying for scores too costly and opaque to use

The provider supplies fund data and investment-management technology, including the ESG data its clients, and their end-investors, rely on across fixed income, where sovereign and government-bond exposures sit alongside corporates.

That ESG data came from an incumbent ratings provider, and two problems made the arrangement untenable. The first was cost: the data, and especially the right to use any of it publicly, was expensive enough that surfacing sustainability information to end-investors was effectively priced out. The provider was paying for scores it could not afford to show the people who most wanted to see them.

The second was opacity: it could read the score but not the reasoning, with no view of the specific policies driving the number, and so no way to explain to a client why a holding scored as it did. The brief was an ESG dataset transparent enough to explain at the level of individual criteria, and priced so the sustainability view could actually be put in front of investors.

A criteria-level score, read all the way down

Veridion scored the provider’s universe on its company knowledge graph and a documented, criteria-level model: an overall score plus environmental, social and governance pillars, each breaking down into 26 granular risk criteria, every criterion carrying its own justification. The model is built to be read all the way down.

Corporate scores map to disclosed company policies, while sovereign scores, the part most ESG feeds skip, map to the evidence of public institutions (ministries, regulators, agencies) plus the activity of top state-owned enterprises as proxies for enforcement credibility and state-controlled impact, contextualised by authoritative indices such as the Climate Change Performance Index, Transparency International’s Corruption Perceptions Index, the EIGE Gender Equality Index and Eurostat.

Throughout, evidence is judged on outcomes and actions, weighted above stated commitments, so a pledge that is not delivered does not lift a score, and the model abstains where the evidence is thin rather than guessing. The work was proven first on the provider’s core universe as a focused, comparable evaluation before any wider commitment.

ESG the provider can finally show investors

The provider can show clients the sustainability of their portfolios, with every score explainable down to the criterion and the policy that produced it, across both the sovereign and corporate sides of the book.

Because the cost structure makes publishing to end-investors viable, the exact use the incumbent’s licensing had blocked, the sustainability view finally reaches the people it was meant for.

The proof of concept converted into a production engagement and is now expanding to score the full universe for benchmarking, establishing Veridion as a transparent, lower-cost alternative to the incumbent for ESG data in asset and fund management.