FTSE Russell Sustainability and ESG Rating Guide

What is FTSE Russell?

FTSE Russell is a global index and data provider that is part of the London Stock Exchange Group. The index develops benchmarks indices, ESG data models, and research used by investors to assess market performance and corporate sustainability.

What is FTSE Russell ESG rating?

The FTSE Russell ESG rating, or ESG Score, is a standardised evaluation of a company’s exposure to and management of environmental, social, and governance (ESG) risks and performance. It uses publicly available information to generate a numeric score on a 0.0-5.0 scale, enabling investors to compare sustainability practices across markets and sectors.

The ESG Scores are broken down into Pillars and Theme Exposures and Scores, based on over 300 individual indicator assessments, depending on an organisation’s unique circumstances.

How are FTSE Russell ESG scores calculated?

FTSE Russell calculates ESG scores by combining exposure scores with management or performance scores. Exposure scores measure the degree of a company’s exposure to ESG risks, while management or performance scores assess how effectively the company addresses those risks.

These are derived from structured assessments of publicly available information across ESG dimensions, and are aggregated using an exposure-weighted average to generate an overall numeric score (0.0 to 5.0).

Who needs to align with FTSE Russell ESG criteria?

Alignment with FTSE Russell ESG criteria is not legally required, but is increasingly relevant for companies exposed to global investors. Companies most affected include:

Listed companies in the FTSE Russell index universes

- - Issuers eligible for inclusion in FTSE Global Equity, FTSE All-World, or related indices are directly exposed to FTSE Russell ESG assessments.

Companies seeking global or institutional capital

- - Firms targeting international investors, ESG funds, or index-tracking capital benefit from disclosures that support accurate ESG scoring.

Companies in markets adopting FTSE Russell methodologies

- - Some exchanges and regulators are aligning local ESG evaluation with FTSE Russell’s model, such as Thailand’s transition toward FTSE Russell ESG Scores.

Companies with limited or fragmented ESG disclosure

- Firms with weak public ESG data are more likely to receive lower scores, regardless of actual performance.

What are the key FTSE Russell ESG Assessment Criteria?

FTSE Russell assesses companies on three broad pillars: Environmental, social, and governance. The index uses public disclosures across a range of themes. Key criteria include:

Environmental exposure and management: Climate, resource use, pollution, environmental policies
Social practices and impacts: Labour standards, human rights, community relations, social risk
Governance quality: Board effectiveness, risk management, anti-corruption practices
Materiality weighting: More material ESG issues receive greater influence in the score
Data transparency and availability: Reliance on publicly disclosed, verifiable information.

These themes are aggregated through more than 300 individual indicator assessments tailored to sector and geography to produce exposure and performance measures that feed into a consolidated ESG score.

Why is FTSE Russell important for ESG and sustainability?

FTSE Russell plays a key role in translating ESG disclosure into investor-relevant signals used in global capital markets.

Directly influences investor decisions

FTSE Russell ESG Scores are used by asset managers, pension funds, and index investors to assess ESG risk, compare companies, and construct portfolios.

Affects index inclusion and weighting

ESG Scores can influence whether a company is included in, excluded from, or under-weighted in ESG-tilted or sustainability-focused indices.

Connects ESG performance to capital access

Strong ESG scores can improve visibility to global capital markets, while weak disclosure or performance may reduce attractiveness to international investors.

Standardises ESG comparison across markets

By applying a consistent, rules-based methodology globally, FTSE Russell enables cross-market and cross-sector ESG comparison.

Is FTSE Russell ESG mandatory?

No, participation in FTSE Russell ESG assessments is voluntary for individual companies, and inclusion in specific ESG-weighted or ESG-tilted indices is not a legal requirement. However, alignment with FTSE Russell’s methodology is increasingly expected by investors and asset managers because ESG scores influence index eligibility, investment decisions, and capital flows.

What is the scope of FTSE Russell ESG Ratings?

FTSE Russell ESG ratings cover thousands of companies globally across developed and emerging markets, with ESG scores integrated into index construction and ESG data products serving investment analysis, benchmarking, stewardship reporting, and portfolio risk management. The coverage includes companies in mainstream indices like the FTSE All-World and Russell 1000 universes, and, in specific markets like Thailand, transitional scopes based on local partnerships, such as the Stock Exchange of Thailand’s (SET) transition to FTSE Russell ESG Scores.

How often does FTSE Russell update ESG Ratings?

ESG scores and related data are updated regularly as part of FTSE Russell’s ongoing ESG data and index maintenance processes. Index series using ESG data are typically reviewed at least annually, with specific update schedules depending on the underlying index ground rules.

FTSE Russell also adds and updates indicator assessments and requirements based on changes in ESG reporting frameworks and guidelines around the world. Updates reflect the latest available publicly disclosed information.

How does FTSE Russell ESG relate to other ESG frameworks?

As an assessment and scoring system, the FTSE Russell’s relationship with major frameworks is as follows:

Global Reporting Initiative (GRI)

GRI supports broad, stakeholder-focused ESG disclosure. Organisations use GRI metrics to populate the indicators established by the FTSE Russell ESG Data Model. Clear GRI-aligned reporting improves data availability for FTSE Russell’s assessments and establishes a standardised reporting workflow that prioritises accurate, high-quality information and reduces the risk of non-disclosure.

Sustainability Accounting Standards Board (SASB) / International Sustainability Standards Board (ISSB)

These focus on financially material, investor-relevant ESG topics. The London Stock Exchange Group encouraged organisations to use SASB to help improve their ESG scores. Later, when the SASB standards were consolidated under the IFRS Foundation to form the ISSB standards, FTSE Russell followed suit to ensure compliance with the globally adopted benchmark.

Task Force on Climate-related Disclosures (TCFD)

Climate-related governance, risk management, and metrics disclosed under TCFD directly support FTSE Russell’s environmental and climate indicators. Major changes to FTSE Russell’s climate change indicators were introduced following the release of the TCFD recommendations, including new indicators such as GHG emissions and sector-specific materiality indicators for high-impact sectors.

Achieve CSRD Reporting Compliance with Presgo

In pursuit of a standardised ESG reporting process, FTSE Russell aligns with various globally recognised frameworks and reporting guidelines based on region and regulatory landscape. To keep up with oncoming changes and regulation updates, adopting modern ESG reporting platforms can help equip organisations with the necessary tools to comply with the index’s ESG Score model.

Presgo is an AI-first ESG reporting platform designed to support organisations’ compliance with regionally and globally recognised frameworks, from the GRI to the ISSB standards. The platform supports FTSE Russell compliance using its built-in features.

Supplier ESG

Collects and manages emissions data and performance metrics from suppliers to help comply with FTSE Russell’s Environmental and Social pillars. Visibility of the supply chain’s ESG performance identifies social risks impacting labour standards, human rights, and more.

Disclosure Hub

Maps internal KPIs, metrics, and narrative disclosures to global ESG frameworks such as the GRI or TCFD and to FTSE Russell’s ESG dimensions. This improves the completeness and clarity of public disclosures that FTSE Russell ESG Scores depend on.

Data Hub

Centralises ESG data across functions into a single comprehensible system. The feature supports audit trails and automated mapping to local and global metrics, helping ESG teams keep track of disclosures relevant to investor-focused frameworks.

Materiality Assessment

Helps organisations identify and prioritise ESG issues that are financially and sector-relevant, aligning with FTSE Russell’s materiality-weighted scoring approach. Documented materiality processes also strengthen investor confidence in disclosed ESG priorities.