Entity ESG Rating
Overview
Entity ESG Ratings are formulated based on evaluation of the entity’s ESG activities, ESG risk exposure, and opportunities, etc. Therefore, Entity ESG Ratings integrate a wide variety of key indicators as well as controversies from an environmental, social, and governance perspective to assess the rated entity’s overall ESG outcomes e.g. management of ESG risks and opportunities.
Role
Entity ESG Ratings provide stakeholders including investors with useful information about the rated entity's ESG outcomes e.g., level of management of ESG risks and opportunities. The rated entity is able to identify through the results of Entity ESG Rating its relative strength and weakness among the ESG factors and drive improvement.
Use of Entity ESG Rating
| User | Purpose of Use | |
|---|---|---|
| Investor | Prior to investment | Use as one of guidelines to select the asset to be included in the investment portfolio |
| After investment | Use to assess sustainability of the asset already included in the investment portfolio | |
| Use to identify drawbacks of the rated entity from a sustainability perspective as a shareholder of the rated entity, and also use as a basis to carry out improvement actions |
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| Rated entity | Use to identify and improve the rated entity’s internal strength and weakness in ESG factors | |
Type of Entity ESG Rating
Korea Ratings provides two types of Entity ESG Ratings. “Basic Rating” is primarily provided, and “In-Depth Rating” is provided upon request of investors or rated entities. The two types of ratings are based on the same rating model and structure, however, there may be differences in the data gathered and the substantiality of the report being offered to investors or rated entities depending on the type of the rating.
- - Basic Rating: Basic Rating is unsolicited rating that KR provides without the request of the investor or the rated entity. KR assigns Basic Rating to companies that KR selects according to KR’s own guidelines, using the information in the public domain such as the rated entity’s disclosed materials, publicly available data of government agencies, and press release.
- - In-Depth Rating: In-Depth Ratings are assigned upon request of the investor or the rated entity to companies that are/are not covered through the Basic Ratings. As for the In-Depth Rating, materials collected through communication with the rated entity are used in addition to publicly available materials.