RepRisk specializes in identifying and assessing ESG and business conduct risks. It runs the world’s largest daily-updated database on ESG risks with 17+ years of unbroken (consistent) data history. We combine AI and advanced machine learning with human intelligence to identify material ESG risks on companies, infrastructure projects (real assets), and countries. We provide clients and partners with “due diligence grade” data and metrics mapped to 108 ESG risk factors and to standards such as UNGC, SASB, SDG, constructed using a transparent, rules-based methodology.

While RepRisk operates in the same landscape, we do not consider ourselves an ESG rating agency. Born out of credit risk management, our history, research approach, and methodology differ when compared to a traditional ESG rating agency. We have always taken an “outside-in” approach to ESG risks, by analyzing information from public sources and stakeholders, and intentionally excluding company self-disclosures. ESG rating agencies generally rely on company self-disclosure and aim to evaluate the impact of the environment and society on a company's financial performance – for example, whether there is enough water near a company’s factory to support their water-dependent operations. Alternatively, RepRisk systematically identifies and assesses ESG risks (or adverse impacts) associated with a company’s business conduct (such as child labor, pollution, and corruption) – for example, whether that same company’s water-dependent operations pollute the water supply for local communities and wildlife, which can lead to reputational damage, violations of local laws, and fines. Thereby, RepRisk enables companies, investors, and others to proactively identify and mitigate these risks that can lead to material reputational, compliance, and financial impacts for the company and its stakeholders, as well as impacts on people and the planet.

RepRisk provides both qualitative information (risk incident details and underlying analytics) and quantitative information (standard and customizable ESG risk metrics) to clients.

Research approach:
RepRisk’s methodology is publicly available on our website – including research approach, research scope (including definitions of our 108 ESG risk factors), research process, the machine learning models we use, and the algorithms behind our risk metrics. We also provide sample data and live code for users to customize their own ESG scores.

RepRisk’s research approach is issues- and events-driven. We search for ESG issues that are based on our research scope derived from key international standards, such as the OECD Guidelines for Multinational Enterprises, and link any company that is associated with this ESG issue.

RepRisk does not use an industry- or country-specific weighting scheme when analyzing the individual ESG risk incidents related to companies. We evaluate impact and materiality at the level of ESG risk incidents, i.e., the impact and materiality assessment of a risk incident does not depend on the associated issues but on the three underlying parameters of severity, novelty, and reach (of the information source) as outlined in our methodology. We provide this information to our clients to ensure they can fully understand the data and how it is aggregated.

Severity captures the impact of the incident, while the combination of severity, novelty, and reach indicates its reputational impact.

This approach allows RepRisk to both provide transparency on the ESG-related risks of a company and to flag them at an early stage, when the severity level is still low. Clients can thus prepare or react before risks become material.

Sources:
RepRisk intentionally excludes any company self-disclosure or self-reporting as outlined in our methodology. RepRisk’s “outside-in” perspective serves as a reality check for how companies conduct their business on the ground around the world where they operate.

While we do not provide the full list of the 150,000+ sources publicly, our clients are able to view sample sources for each ESG risk incident in our dataset and they are able to refer to the original document (source of the ESG risk incident).

All sources are pre-classified by reach, which refers to the readership/circulation of the source; reach of the source can also serve as a proxy for credibility. There are three levels of reach: limited reach, medium reach, and high reach; clients can see the reach level for every ESG risk incident in our dataset.

Due to our “outside-in” research approach, we do not have an engagement process in place with companies and companies cannot influence their risk profile or score. However, anyone can contact us with any questions they have. We provide contact information publicly available on our website (including contact form, email address, phone number, and postal address).

Our clients are also able to contact us directly from within our web-based tool, the RepRisk ESG Risk Platform, via our Client Support Team, or via their Account Manager.

Risk metrics:
The algorithms behind RepRisk’s risk metrics are public. The risk metrics are calculated based on a company’s business conduct and indicate the company’s current ESG-related risk exposure. They measure absolute risk, not relative risk. Therefore, the distributions reflect our measured rates of absolute risk levels across companies and are not forced to fit any particular probability distribution (e.g., normal distribution).

The metrics are incident-driven and do not directly consider mitigating actions. They decay to the low-risk range if the company is not associated with any new incidents – i.e., if mitigating actions prove successful in preventing further incidents.

The metrics are used for forward-looking analyses, as a company’s current business conduct and ESG incidents are associated with a greater risk of future incidents (please see research by Moody’s Analytics for more details).

Reliability
Clients can access a consistent time series of 17+ years of daily data that can be used for rigorous backtesting and quantitative analysis. Our methodology has been consistent since day one – when we first started our dataset in 2007 – and the way we assess severity, reach, and novelty, as well as our core research scope has not changed. Our ESG Topic Tags (which form the 108 ESG risk factors together with the ESG issues) are a dynamic concept and we expand the list in response to client feedback and emerging trends.

RepRisk’s research methodology is fully rules-based and transparent, i.e., there is no discretion or judgment call of an analyst when it comes to evaluating the ESG risks of a company or infrastructure project; RepRisk analysts are carefully trained to follow RepRisk’s strict, rules-based methodology.

In order to ensure data quality and consistency over time, RepRisk has an extensive quality assurance process in place. Before an ESG risk incident is published in RepRisk's dataset, it undergoes a quality assurance check and approval by a senior RepRisk Analyst to ensure that the overall analysis process has been completed is in line with RepRisk's rules-based methodology – i.e., that each incident is analyzed and scored in the same way.

RepRisk has a team of 150+ highly skilled and carefully trained analysts across our offices around the world. Together, the analysts speak 40+ languages and play a crucial role in producing “due diligence grade” data and refining RepRisk’s algorithms to accurately identify ESG risk.

To advance research in ESG and facilitate continuous scrutiny and validation of our dataset, RepRisk has established an Academic Advisory Board in early 2021, and we have been licensing our data to academic institutions worldwide via the Wharton Research Data Services (WRDS) since 2015. A selection of research using RepRisk data is available on our website.

Timeliness
RepRisk’s data is updated daily – i.e., every day, RepRisk screens, identifies, and analyzes risk incidents, adds curated research and analytics to our dataset, and updates our proprietary risk metrics whenever new risk information is published. While technology enables the speed, scale, and breadth of our dataset, our human analysts ensure the quality and integrity of our data. The curation by our human analysts ensures we provide “due diligence grade” data to our clients.

Coverage
RepRisk’s research approach is issues- and events-driven, i.e., we search for ESG issues that are based on our research scope and capture ANY company that is associated with this ESG issue – whether this company is big, small, public, private, and across all sectors and geographies. Every day, an average of 50 new companies with ESG risk are added to the RepRisk dataset (or 1,000+ per month). The result is the industry’s largest dataset on ESG risk, covering 280,000+ public and private companies across all sectors and countries, as well as 85,000+ infrastructure projects such as dams, pipelines, and factories. Notably, RepRisk is the only ESG data provider that systematically covers private companies (265,000+), emerging and frontier markets (approx. 45% of companies are headquartered in non-OECD countries), and infrastructure projects.

RepRisk is an independent, privately-owned company. Our independence and our sole focus on data and research – exclusively on ESG risks – means that RepRisk can deliver high-quality information that clients expect without distraction. We can be nimble and adjust easily to what our clients need and, most importantly, do what is right. For both our clients and our business.

RepRisk does not provide any opinions or recommendations for proxy voting, bespoke assessments, assurances, second-party opinions, engagement services, nor any engagement, advisory, or consulting services.