ESG Ratings - Interview with Martin Raab

Basically, an ESG Rating is nothing more than a school grade. Grade in respect to the E – the environmental things –, the S – the social things – and the G – the governance of a company. All of that wrapped together is in essence an ESG Rating.

Everybody wants to invest more ESG aligned or has appetite to turn the portfolio a bit towards sustainability but currently nobody really has a deep understanding and deep data insight about what the company is effectively doing in the E, the S and the G. That’s currently a bit of the challenge.

The GGX approach is called Pure Play with regard to the ratings, which means we reduce it to the minimum, effectively to 15 datapoints. We actively rate the company on our premises. For that we use 15 datapoints, that means not 400, not 100, relatively focused. In essence, if the company improves for instance in datapoint 3 and 5 it has an effect in that rating and is also visible to the investor.

The ESG performance of a company with the help of the GGX ESG Rating is quantifiable. That really is something new. And again, we are focusing on most sector generic factors.

We do not use AI. We are by good purpose not using robotics or algorithms, because what we learned is that about 20% of the available data is wrong or incorrectly attributed. We do it with humans, the classic old way. Therefore, we have the comfort to ensure that the data is right, correctly attributed and, at the end of the day, the rating reflects the reality.

There is an ongoing problem which the nature of the corporate reportings. Different companies have different reporting cycles. At the end of the day it is kind of a limbo. Which company is already up and running with these figures, which one is not? At the GGX ESG Ratings, only when current data is in you get a rating, no data, no rating.

No ESG Rating is assigned to the current year, perhaps there is old data for the previous years, then this rating is – so to speak – still active but we clearly label from which year the label is.

Absolutely, that is a very crucial part. Yes, we do. Mostly these companies ask us to reach out by e-mail and then we get a written response. In a few cases we also reach out by phone.

Absolutely not. We do not take money to generate these ratings, as they are not credit ratings which are issuer-driven. It is really steered by us, and we independently manage the whole rating process.

It depends. We have very affordable, fair rates that means we introduced a fully new pricing model in order to broaden the userbase. From professional investors to a family office, to endowments, to retailer portals, we offer this data for buy sites. As a professional investor or as a buy site I pay for these ratings, that come with additional information then as well. Everyone however gets free access to the upper level of information that is provided on our website.

Thank you for reading. You can find everything about our ESG Ratings and Pure Play on our website.