ESG100 Methodology:
Insight into the scoring and analysis of ESRS readiness

The 2023 edition of the ESG100, published on 8 September, is the first large-scale study of how well prepared companies are for the introduction of the European Sustainability Reporting Standards (ESRS), due to take effect in 2024.

A transparent assessment of ESG reporting in Scandinavia

The ESG100 analysis examines the degree to which the corporate ESG reporting of the 100 largest listed companies from each Scandinavian market (300 in total) provides valuable information for decision makers of both the financial and non-financial kind. 

With a spotlight on ESRS readiness, the 2023 ESG100 represents a first-of-its-kind study of how prepared Scandinavian companies are for the upcoming requirements of the EU’s European Sustainability Reporting Standards, where each company receives a grade from ‘A+’ to ‘F’ based on the assessment criteria.

How did we conduct the 2023 analysis?

The sixth edition of the ESG100 marks a significant change in methodology to provide insights on readiness for the ESRS and to assign company scores against ESRS disclosure requirements and other ESG reporting criteria.

Focus on ESG reporting, not performance

The ESG100 remains focused on the quality of a company’s ESG reporting, not its ESG performance. For instance, companies in industries known for high emissions may nevertheless achieve a high score on the strength of their reporting.

ESG100 selection and data sources

The assessment is based on the 100 largest companies by market value listed on each of the Oslo Stock Exchange, Nasdaq Stockholm and Nasdaq Copenhagen, as of 31 December 2022. All data is gathered from publicly available sources, including the sustainability reports, annual reports, corporate governance and remuneration reports of these companies.

Assessment criteria

ESRS readiness was assessed through an evaluation of each company’s reporting against 68 disclosures derived from key ESRS standards: ESRS 2 General disclosures, ESRS E1 Climate change, ESRS E4 Biodiversity and ecosystems, ESRS S1 Own workforce and ESRS G1 Business conduct.

The grades awarded to companies were assessed through an evaluation of each company’s reporting against 85 research questions encompassing ESRS disclosure requirements and other criteria based on sustainability reporting best practices.

As the ESRS disclosure requirements are subject to a materiality assessment (except for the mandatory ESRS 2 General disclosures standard), topics such as biodiversity and circularity that may not be material to every company have been excluded.

Scoring system

The grades are based on how many of the 85 research questions a company discloses against – the “raw score”. All research questions are scored equally and no weighting is applied to any of the sections. The raw score is converted into one of eight grades from ‘A+’ to ‘F’ for comparability.

‘A’ and ‘B’ grades are considered excellent and good reporting respectively, while ‘F’ is given to those companies providing very incomplete reporting.

The grades are based on percentiles corresponding to the top and bottom 5% of company raw scores and an even distribution of 15% for the remaining six grades. A forced ranking is applied to avoid a situation where companies with the same raw score are awarded different grades.

Impartiality and quality control

The methodology and criteria were developed by Position Green and have been quality assured in collaboration with academic partners and the investor community, including Columbia University and KLP, Norway’s largest pension fund. To achieve independence and objectivity in the ratings of companies that are also clients of Position Green, students were engaged through non-profit organisation Sustainergies in Sweden to undertake the research. All completed company assessments by the research team were reviewed for quality assurance by Position Green to verify consistency in the application of the criteria.