ISS ESG, the sustainable investment division of ISS STOXX, has introduced a new Sustainability Bond Rating aimed at evaluating the sustainability impact and risk of green, social, sustainability, and sustainability-linked bonds (GSSS+). The rating applies to both corporate and sovereign issuers and is designed to offer investors a detailed, issuance-level assessment.
The move comes in response to a sharp rise in both the volume and complexity of labelled bond issuances, alongside varying regulatory and reporting frameworks.
“The volume and complexity of labelled bond issuances has increased significantly in recent years, against a backdrop of disparate regulatory and market reporting standards,” said Till Jung, Head of ESG at ISS STOXX. “Our new, differentiated offering addresses investors’ key need for comparative insights on the material sustainability risks and opportunities of a labelled bond at issuance level.”
The Sustainability Bond Rating supports a range of investor use cases, including risk assessment, regulatory reporting, portfolio alignment with the EU Taxonomy, and impact measurement. It also assists with verification of external certification frameworks, second-party opinions, and tracking the use of proceeds and performance of sustainability-linked targets throughout a bond’s lifecycle.
The rating is structured around three core dimensions:
- Alignment with International Standards, such as those from the International Capital Market Association (ICMA)
- Environmental and Social Impact Assessment
- Issuer’s Sustainability Strategy
It incorporates up to 150 indicators per bond, drawn from a broader pool of around 400 indicators, and uses a 12-point grading scale from A+ (excellent) to D- (poor).
The system also offers supplementary data including estimated greenhouse gas emissions intensity of financed projects and alignment with the United Nations Sustainable Development Goals (SDGs) and EU Taxonomy.
The tool is designed for integration into investor workflows via data feeds and APIs, allowing for streamlined adoption in portfolio management and reporting processes.
According to ISS ESG, the methodology has been developed through consultations with global investors, market participants, and methodological reviews of the evolving sustainable finance landscape.
