ESG risk rating
ESG & GovernanceA rating of how much ESG risk a company has left unmanaged, on an absolute scale where a lower number means lower risk.
The best-known example is the Morningstar Sustainalytics ESG Risk Rating. It starts from the company's exposure to material ESG issues and subtracts the part the company manages. The remaining unmanaged risk is placed in one of five bands: negligible (0 to 10), low (10 to 20), medium (20 to 30), high (30 to 40) and severe (40 and above). Because the scale is absolute, companies in different industries can be compared.
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