RepRisk AG is an environmental, social, and corporate governance (ESG) data science

company A company, abbreviated as co., is a legal entity representing an association of people, whether natural, legal or a mixture of both, with a specific objective. Company members share a common purpose and unite to achieve specific, declared ...

based in Zurich, Switzerland, specializing in ESG and business-conduct risk research, and quantitative solutions. The company runs an online due-diligence database that allows clients to monitor and assess the risk exposure of companies, infrastructure projects, sectors, and countries related to 28 ESG issues. The issues are mapped to the 10 principles of the

UN Global Compact The United Nations Global Compact is a non-binding United Nations pact to encourage businesses and firms worldwide to adopt sustainable and socially responsible policies, and to report on their implementation. The UN Global Compact is a princi ...

, the

Sustainability Accounting Standards Board The Sustainability Accounting Standards Board (SASB) is a non-profit organization, founded in 2011 by Jean Rogers to develop sustainability accounting standards. Investors, lenders, insurance underwriters, and other providers of financial capital ...

(SASB) Materiality Map, and the

United Nations Sustainable Development Goals The Sustainable Development Goals (SDGs) or Global Goals are a collection of 17 interlinked objectives designed to serve as a "shared blueprint for peace and prosperity for people and the planet, now and into the future".United Nations (2017) R ...

(SDGs). On a daily basis, RepRisk assesses ESG risks such as

environmental degradation Environmental degradation is the deterioration of the environment through depletion of resources such as quality of air, water and soil; the destruction of ecosystems; habitat destruction; the extinction of wildlife; and pollution. It is defin ...

, human rights abuses,

child labor Child labour refers to the exploitation of children through any form of work that deprives children of their childhood, interferes with their ability to attend regular school, and is mentally, physically, socially and morally harmful. Such e ...

forced labor Forced labour, or unfree labour, is any work relation, especially in modern or early modern history, in which people are employed against their will with the threat of destitution, detention, violence including death, or other forms of ex ...

fraud In law, fraud is intentional deception to secure unfair or unlawful gain, or to deprive a victim of a legal right. Fraud can violate civil law (e.g., a fraud victim may sue the fraud perpetrator to avoid the fraud or recover monetary compen ...

, and

corruption Corruption is a form of dishonesty or a criminal offense which is undertaken by a person or an organization which is entrusted in a position of authority, in order to acquire illicit benefits or abuse power for one's personal gain. Corruption m ...

that can impact an organization's reputation, financial profitability, or lead to compliance issues.

Financial institution Financial institutions, sometimes called banking institutions, are business entities that provide services as intermediaries for different types of financial monetary transactions. Broadly speaking, there are three major types of financial inst ...

s and

corporation A corporation is an organization—usually a group of people or a company—authorized by the state to act as a single entity (a legal entity recognized by private and public law "born out of statute"; a legal person in legal context) and ...

s use RepRisk to prevent and mitigate ESG and business conduct risks related to their operations, business relationships, and investments. The RepRisk database systematically identifies ESG risks by analyzing over 100,000 sources per day in 20 major business languages. As of July 2020, the database covered more than 150,000 public and private companies, and over 40,000 infrastructure projects reported to have links to ESG risks, as well as ESG risks related to all countries and 34 different sectors. It also includes data on ESG issues and topics, over 20,000

NGO A non-governmental organization (NGO) or non-governmental organisation (see spelling differences) is an organization that generally is formed independent from government. They are typically nonprofit entities, and many of them are active in h ...

s, and over 15,000 governmental bodies.

History

RepRisk was formed in 1998 as ECOFACT, a Zurich-based environmental and social risk consultancy focused on the financial sector. In 2006, its ESG risk database was created at the request of

UBS UBS Group AG is a multinational investment bank and financial services company founded and based in Switzerland. Co-headquartered in the cities of Zürich and Basel, it maintains a presence in all major financial centres as the largest Swi ...

, and in 2010, RepRisk split from the consultancy and became an independent company.

Methodology

Research scope and process

RepRisk screens, on a daily basis, over 100,000 public sources and external stakeholders, including international and local print and online media, news websites, newsletters, NGOs, governmental bodies, think tanks, blogs and Twitter, in 20 major business languages. This screening identifies companies and projects linked to ESG-related risk. RepRisk monitors 28 ESG issues (for example local

pollution Pollution is the introduction of contaminants into the natural environment that cause adverse change. Pollution can take the form of any substance (solid, liquid, or gas) or energy (such as radioactivity, heat, sound, or light). Pollutants, th ...

tax evasion Tax evasion is an illegal attempt to defeat the imposition of taxes by individuals, corporations, trusts, and others. Tax evasion often entails the deliberate misrepresentation of the taxpayer's affairs to the tax authorities to reduce the tax ...

) and 67 topic tags, or "hot topics" (such as

palm oil Palm oil is an edible vegetable oil derived from the mesocarp (reddish pulp) of the fruit of the oil palms. The oil is used in food manufacturing, in beauty products, and as biofuel. Palm oil accounted for about 33% of global oils produced fr ...

, arctic drilling,

indigenous people Indigenous peoples are culturally distinct ethnic groups whose members are directly descended from the earliest known inhabitants of a particular geographic region and, to some extent, maintain the language and culture of those original people ...

coal Coal is a combustible black or brownish-black sedimentary rock, formed as rock strata called coal seams. Coal is mostly carbon with variable amounts of other elements, chiefly hydrogen, sulfur, oxygen, and nitrogen. Coal is formed when ...

, or

water scarcity Water scarcity (closely related to water stress or water crisis) is the lack of fresh water resources to meet the standard water demand. There are two types of water scarcity: physical or economic water scarcity. Physical water scarcity is whe ...

). The research scope is defined in accordance with international standards and norms, such as the ten principles of the

United Nations Global Compact The United Nations Global Compact is a non-binding United Nations pact to encourage businesses and firms worldwide to adopt sustainable and socially responsible policies, and to report on their implementation. The UN Global Compact is a princi ...

(UNGC) and

(SASB). To achieve consistent data over time, RepRisk's database uses strict, rules-based processes that incorporate both

artificial intelligence Artificial intelligence (AI) is intelligence—perceiving, synthesizing, and inferring information—demonstrated by machines, as opposed to intelligence displayed by animals and humans. Example tasks in which this is done include speech ...

and

machine learning Machine learning (ML) is a field of inquiry devoted to understanding and building methods that 'learn', that is, methods that leverage data to improve performance on some set of tasks. It is seen as a part of artificial intelligence. Machine ...

with human intelligence. The following steps outline the high level RepRisk screening process: # Sources are screened through the company’s proprietary AI tool that identifies risk incidents through text and

metadata Metadata is "data that provides information about other data", but not the content of the data, such as the text of a message or the image itself. There are many distinct types of metadata, including: * Descriptive metadata – the descriptive ...

extraction from unstructured content, followed by

multi-lingual Multilingualism is the use of more than one language, either by an individual speaker or by a group of speakers. It is believed that multilingual speakers outnumber monolingual speakers in the world's population. More than half of all E ...

de-duplication and clustering processes. # An analyst studies adverse incidents, defines severity and novelty of each, using international standards. # Relevant entities (companies, projects, sectors, and countries) are linked to the risk event, assigned a title, and a summary is completed. # The compiled news passes a quality check prior to being released to the RepRisk ESG risk platform database.

RepRisk Index (RRI)

The RepRisk Index (RRI) is a proprietary

algorithm In mathematics and computer science, an algorithm () is a finite sequence of rigorous instructions, typically used to solve a class of specific problems or to perform a computation. Algorithms are used as specifications for performing ...

that dynamically captures and quantifies the reputational exposure to ESG and business conduct risks. The RRI is a quantitative measure ranging from 1 (lowest) to 100 (highest). Companies that have been exposed to higher levels of criticism in the past are less sensitive to new adverse events and allegations in comparison to a company that experiences a first-time incident. If a company does not experience new criticism, their score will eventually drop to zero over a maximum period of two years. A current RRI value indicates the current media and stakeholder exposure. The Peak RRI is an overall risk exposure indicator that indicates the highest level of criticism over the past two years. The RRI score is calculated based on a number of factors, including the influence of the source of the information, the frequency and timing of criticisms, and the novelty and severity of the criticism.

RepRisk Rating (RRR)

The RepRisk Rating (RRR) is a letter rating (AAA to D) and is similar to a credit rating. It facilitates benchmarking and ESG integration. Available only to companies, it combines a company’s own ESG risk exposure with the ESG risk exposure of the countries and sectors in which the company has been exposed to risks. Both the Rating and the RRI are updated daily for all companies in the database.

RepRisk UN Global Compact Violator Flag

This indicator identifies companies with a high potential risk of violating one or more of the ten UNGC Principles. The flag allows users to see if the UNGC violations are primarily linked to the operations or to the supply chain of a company.

External use of data

* FactSet used RepRisk as their first third party provider of environment, social, and governance (ESG) and business conduct risk data on the new Open: Marketplace Platform and FactSet Workstation. *

was RepRisk's first client and in 2010, as part of a broader corporate responsibility initiative, UBS expanded its global compliance database to include information gathered about environmental and social risks by RepRisk. The data is applied to companies, prospective sourcing partners and investment clients to identify risks that could impact the bank's reputation and financial performance. In 2011, UBS expanded its global compliance database to include information on environmental and social issues provided by RepRisk, a global research firm specialized in environmental, social and corporate governance (ESG) risk analytics and metrics. This was done in an effort to mitigate environmental and social risks that could impact the bank's reputation or financial performance and to simultaneously help globally standardize and systematically implement the firm's due diligence processes. RepRisk data is used in the on-boarding process to screen potential new clients and sourcing partners, alongside periodic client reviews and, also, to evaluate the risks related to transactions in investment banking and institutional lending. *

Dow Jones Sustainability Index The Dow Jones Sustainability Indices (DJSI) launched in 1999, are a family of indices evaluating the sustainability performance of thousands of companies trading publicly, operated under a strategic partnership between S&P Dow Jones Indices and Ro ...

(DJSI) / RobecoSAM: RobecoSAM uses RepRisk as part of the Media and Stakeholder Analysis section of its Corporate Sustainability Assessment for the

, in order to identify companies' involvement in environmental, economic and social situations that may have a damaging effect on their reputation and core business. Once a company is listed on the DJSI, it is monitored daily for any critical arising issues, which can lead to the exclusion of the company if deemed critical enough. Examples of events that would lead to exclusion include: commercial practices, human rights abuses,

layoff A layoff or downsizing is the temporary suspension or permanent termination of employment of an employee or, more commonly, a group of employees (collective layoff) for business reasons, such as personnel management or downsizing (reducing the ...

s or worker disputes, or catastrophic disasters. This monitoring is supported by RepRisk, a global research firm and provider of environmental, social and governance (ESG) risk data. RepRisk screens media outlets, stakeholder groups and other publicly available sources to identify risks related to these issues. The information gathered is then systematically analyzed and quantified. If a critical event happens, the situation is analyzed by RobecoSAM for the scope in which it reaches. If large enough, the event will be analyzed further based on severity, media coverage, and crisis management. RobecoSAM analysts decide from here whether the company will be excluded from the DJSI. An assurance report is completed by Deloitte to ensure the validity of the company'
information.
* FTSE: RepRisk data is among the ESG data providers used by FTSE in their ESG methodology for various benchmarks. * The Norwegian Global Pension Fund selected RepRisk in 2009. RepRisk was selected again in 2013. To support the ethical screening process, the Council on Ethics works with RepRisk ESG Business Intelligence, a global research firm and provider of environmental, social and governance (ESG) risk data. RepRisk monitors the companies in the Norwegian Pension Fund's portfolio for issues such as severe human rights violations, particularly regarding child labor, forced labor, and violations of individual rights in conflict areas, as well as gross environmental degradation and corruption. RepRisk has been working with the Council on Ethics since 2009 and in 2014, re-won the tender for ESG data provision for 2014-2017. *

First State Investments First Sentier Investors, formerly known as Colonial First State Global Asset Management in Australia and First State Investments elsewhere, is a global asset management business that manages US$134.4 billion (as at 30 September 2022) in assets ...

: RepRisk is used to screen companies in their portfolios and for company engagement. *

BASF BASF SE () is a German multinational chemical company and the largest chemical producer in the world. Its headquarters is located in Ludwigshafen, Germany. The BASF Group comprises subsidiaries and joint ventures in more than 80 countries ...

: RepRisk data is used in part to screen the suppliers for ESG-related risks. * The Sustainability Accounting Standards Board (SASB) uses RepRisk data as an input for the development of sustainability accounting standards by supporting its evidence-based research. *

Carbon Disclosure Project The CDP (formerly the Carbon Disclosure Project) is an international non-profit organisation based in the United Kingdom, Japan, India, China, Germany and the United States of America that helps companies and cities disclose their environmental i ...

: RepRisk's data serves as an input in the evaluation of companies for CDP's Climate Performance Leaders and Water Performance Leaders, which outlines the top companies around the world doing the most to combat climate change and to manage their

water resources Water resources are natural resources of water that are potentially useful for humans, for example as a source of drinking water supply or irrigation water. 97% of the water on the Earth is salt water and only three percent is fresh water; slight ...

, respectively. RepRisk's data adds to the current evaluation process by validating company-provided information and clarifying how a company's policies, commitments and initiatives translate into performance. *UN-supported

Principles for Responsible Investment Principles for Responsible Investment (UNPRI or PRI) is a United Nations-supported international network of financial institutions working together to implement its six aspirational principles, often referenced as "the Principles". Its goal is to u ...

(PRI): The RepRisk database is used by the UNPRI's Investment Engagement team. * Global 100 Ranking: RepRisk's assessment data was incorporated in the sanctions portion of the screening of the Global 100 Most Sustainable Corporations in the World annual ranking and sustainability equity index managed by

Corporate Knights Corporate Knights is a media and research company based in Toronto, Canada, focused on advancing a sustainable economy. The company publishes an award-winning magazine,  ''Corporate Knights'', and produces global rankings, research reports, a ...

Capital. * World's Most Ethical Companies ranking: RepRisk's data is used as part of the 2015 evaluation process to validate self-reported scores provided by companies who completed the Ethics Quotient survey, th
underlying framework
for the World's Most Ethical Companies designation published by

Ethisphere The Ethisphere Institute is a for-profit company that defines and measures corporate ethical standards, recognizes companies that excel, and promotes best practices in corporate ethics. The company is located in Scottsdale, Arizona. The comp ...

. * 2014 Newsweek Green Rankings:

Newsweek ''Newsweek'' is an American weekly online news magazine co-owned 50 percent each by Dev Pragad, its president and CEO, and Johnathan Davis (businessman), Johnathan Davis, who has no operational role at ''Newsweek''. Founded as a weekly print m ...

incorporated RepRisk assessments of reputational risk for companies for the "Reputation Score" indicator in their 2014 Green Rankings. The Newsweek Green Rankings are one of the world's most recognized assessments of corporate environmenta
performance
*

Ecolab Ecolab Inc. is an American corporation that is headquartered in Saint Paul, Minnesota. It develops and offers services, technology and systems that specialize in treatment, purification, cleaning and hygiene of water in a wide variety of appli ...

: RepRisk’s Industry and Country Risk scores are available in the risk analysis section of the Water Risk Monetizer developed by Ecolab. *JUST Capital: RepRisk data used in JUST Capital's 2017 ranking of America's Most JUST Companies report as input to evaluate the performance of the largest publicly traded corporations in the U.S. * Chartered Quality Institute: RepRisk data used for Technology on Trial 2018 report by the Chartered Quality Institute to find sector wide governance failures after assessing the world’s leading technology companies. *

World Business Council for Sustainable Development The World Business Council for Sustainable Development (WBCSD) is a CEO-led organization of over 200 international companies. The Council is also connected to 60 national and regional business councils and partner organizations. Its origins d ...

: (2018) RepRisk data used in Reporting Matters 2018 publication to evaluate the Balance indicator of WBCSD’s framework. *Nest: Nest began integrating RepRisk data in 2019 into its ESG initiatives and investment decision process, to allow the pension scheme to consider the investment risks and opportunities associated with ESG factors to provide a more holistic view of companies, alongside the more traditional investment risk factors. *Aqueduct Water Risk Atlas: Aqueduct Water Risk Atlas employed RepRisk's proprietary Country Sector Matrix in 2019 to understand the broader country-specific ESG and reputational risks that may threaten water quantity, quality, and access. *

State Street Global Advisors State Street Global Advisors (SSGA) is the investment management division of State Street Corporation and the world's fourth largest asset manager, with nearly $4.14 trillion (USD) in assets under management as of 31 December 2021. The comp ...

: State Street Global Advisors launched SPDR S&P 500 ESG in 2019 with 'fast-exit' feature based on RepRisk data. If a company is reported by RepRisk to have violated its RepRisk Index threshold of 70, it will be removed from the index within two business days. *

: Corporate Knights use RepRisk data to identify companies who have violated UN Global Compact Principles in their Carbon Clean 200 list 2020. *Crux Informatics partners with RepRisk to accelerate ESG market reach and delivery capabilities in 2020. *As of 2020, BattleFin’s alternative data suite of solutions includes RepRisk data. *ICE Data Services is integrating ESG risk data from RepRisk into its ESG Reference Data service in 2020. *In 2020, J.P. Morgan’s DataQuery offers RepRisk’s data.

Data products and services

RepRisk data is available in various formats and products and is searchable online: * ''Benchmarking Briefs'' benchmark the ESG risk exposure for up to ten companies. * ''Company Reports'' outline the ESG and business conduct risks for a single company, and are available via PDF. * ''Supplier Monitoring Briefs'' and ''Portfolio Monitoring Reports'' are also available on a monthly or quarterly basis and identify companies in a supplier list or investment portfolio that are most exposed to ESG risks, and are most likely to violate internal policies, ethical guidelines, or international standards and are available via PDF.

Publications and research

Annual Most Controversial Companies Report

Since 2013, RepRisk releases a yearly ranking of the top ten most controversial companies in the world, related to ESG issues. The ranking is based on the companies that have the highest RRI over a particular year.

Annual Most Controversial Projects Report

Since 2013, RepRisk releases a yearly ranking of the top ten most controversial projects in the world, related to ESG issues. The ranking is based on the projects that have the highest RRI over a particular year.

Research

* The Effect Of Bad News On Credit Risk (Research Study): Julian Koelbel, a PhD student at the Swiss Federal Institute of Technology (ETH) in Zurich, used RepRisk data in the research study: The effect of bad news on credit risk: a media based view of the pricing of corporate social responsibility. The paper, which won an Award for Excellence in Responsible Investment Research at the UN PRI's annual Academic Network conference in 2013, highlighted that more negative news on CSR issues are associated with higher credit default swap spreads. The study is published in the Strategic Managemen
Journal
* ESG Alpha in China (Research Study): Michael Barnett of the Centre for Corporate Reputation at Oxford University, and Jimmy Chen, Andreas Hoepner and Qian Li from the Centre for Responsible Banking & Finance at the University of St Andrews, used RepRisk data as the basis for their recent research paper, "ESG Alpha in China." The research paper, which investigated the effect of ESG risks on the share performance of Chinese firms and found that ESG criteria can be used to generate alpha for investments in Chinese companies, won the European PRI award in the category of Investment Strategy. * Kepler Cheuvreux: Kepler Cheuvreux and Affectio Mutandi included RepRisk data in their Soft Law Violation & Liability research report, one of a series of reports produced by the company surrounding business ethics. Kepler Cheuvreux also featured RepRisk in its “The Responsible Investor Playbook” published in 2016. * RepRisk and CSRHub published a joint research report in May 2015 on the relationship between perceived CSR performance (based on CSRHub data) and reputational risk exposure related to ESG issues (based on RepRisk data). * ESG Performance of European investment funds. * The effect of bad news on reputation and share price: An empirical survey. * Does Corporate Social Responsibility Benefit Society? Jun Li, University of Michigan, Stephen M. Ross School of Business, and Di (Andrew) Wu, University of Michigan
Stephen M. Ross School of Business(2017)
* The Relationship between Sustainability Performance and Sustainability Disclosure—Reconciling Voluntary Disclosure Theory and Legitimacy Theory * How Media Coverage of Corporate Social Irresponsibility Increases Financial Risk * Corporate Social Responsibility and Firm Reputation Risk * The Price of Ignoring ESG Risks * Kepler Cheuvreux: Kepler Cheuvreux released their 2016 special report on tools in SRI-ESG field based on RepRisk data, including use cases, links with academic research, and underlying methodological assumptions. *(2019)

Citi Citigroup Inc. or Citi (stylized as citi) is an American multinational investment bank and financial services corporation headquartered in New York City. The company was formed by the merger of banking giant Citicorp and financial conglomer ...

Global Data Insights: Citi Global Data Insights published The Rise of AI in ESG Evolution in 2019, featuring RepRisk's proprietary research methodology.Citi Global Data Insights Finds Potential for Outperformance Based on RepRisk Data
Retrieved 22 January 2021.

Partners

Selected RepRisk partner list.

References

{{reflist, 30em, refs= {{cite web, title=Most Environmentally and Socially Controversial Companies of 2009, url=http://www.accountability-central.com/nc/single-view-default/article/most-environmentally-and-socially-controversial-companies-of-2009/, publisher=Accountability Central, access-date=6 June 2014 {{cite web, title=Top 10 Most Environmentally and Socially Controversial Companies of 2010, url=http://inspiredeconomist.com/2011/01/10/top-10-most-environmentally-and-socially-controversial-companies-of-2010/, website=Inspired Economist, access-date=6 June 2014, date=2011-01-10 {{cite web, last1=Collins, first1=Tyler, title=RepRisk Releases Report on Most Controversial Companies of 2012, url=http://blog.firstaffirmative.com/2013/02/18/reprisk-releases-report-on-most-controversial-companies-of-2012/, website=First Affirmative, access-date=26 June 2014 {{cite web, title=RepRisk Releases Annual 'Most Controversial Companies', url=http://www.sustainablebrands.com/news_and_views/stakeholder_trends_insights/jennifer_elks/reprisk_releases_annual_most_controversial_, website=Sustainable Brands, access-date=26 June 2014, date=2014-04-17 {{cite news, last1=Kelleher, first1=Ellen, title=SRI funds and rivals so alike, url=http://www.ft.com/cms/s/0/ad905bc6-03cc-11e2-9322-00144feabdc0.html#axzz2CWfCC0uK, access-date=24 July 2014, work=Financial Times, date=23 September 2012 {{cite web, title=New Partnership Offers Clients of Governance & Accountability Institute Access to RepRisk Comprehensive ESG Intelligence, url=http://3blmedia.com/News/New-Partnership-Offers-Clients-Governance-Accountability-Institute-Access-RepRisk-Comprehensive, website=3BL Media, access-date=10 July 2014 {{cite web, title=RepRisk AG - Corporate Profile, url=http://www.sri-connect.com/index.php?option=com_comprofiler&task=userProfile&Itemid=4&user=1079524, website=SRI Connect, access-date=12 July 2014 {{cite news, last1=Faye, first1=Kilburn, title=RepRisk Preps ESG Country-Sector Risk Matrixes, url=http://www.waterstechnology.com/inside-market-data/news/2333623/reprisk-preps-esg-country-sector-risk-matrixes, work=Waters Technology, publisher=Waters Technology, date=11 March 2014 {{cite news, title=Norwegian government fund selects RepRisk for portfolio monitoring, url=http://www.reprisk.com/norwegian-government-fund-selects-reprisk-for-portfolio-monitoring/, access-date=28 May 2014, publisher=Reputation Institute, date=28 January 2014 {{cite news, title=ESG Analytics Unveils Private Equity Industry's First Comprehensive Investment Decision Support Tool, url=http://www.businesswire.com/news/home/20130926005358/en/ESG-Analytics-Unveils-Private-Equity-Industry%E2%80%99s-Comprehensive, access-date=26 May 2014, publisher=Business Wire, date=26 September 2013, ref=bizwire {{cite news, last1=Haederli, first1=Alexandre, title=RepRisk évalue la réputation des grandes entreprises, url=http://www.reprisk.com/le-matin-dimanche/, access-date=26 May 2014, publisher=Le Matin Dimanche, date=27 January 2013 {{cite news, last1=Parker, first1=Kevin, title=SICM's Parker: Forget the emotional arguments about sustainable investing, url=http://www.fundweb.co.uk/opinion/sicms-parker-forget-the-emotional-arguments-about-sustainable-investing/2007139.article/, access-date=26 May 2014, publisher=Fundweb, date=25 February 2014 Analytics companies Companies based in Zürich Macroeconomics consulting firms Ethical investment Financial data vendors Financial services companies established in 1998 Risk management companies Risk analysis methodologies Social responsibility organizations Environmental organisations based in Switzerland Rating systems