World Economics ESG Methodology

Updated: September 13, 2023


 

ESG Index

The World Economics ESG Index is a composite index derived from the average of the Environmental, Social and Governance Impact Indexes defined below. The higher the World Economics ESG Index, the better a country is performing.

 

Environmental Index

The World Economics Environmental Impact Index focus of each country’s total carbon and methane emissions. Source data from Friedlingstein et al’s 2020 Global Carbon Atlas was obtained in an emissions volume per capita format. UN Population data was combined with emissions data to project total carbon and methane emissions per country. The resulting total Carbon and Methane data has been indexed on a scale of 0-100. The Indexes are then averaged to calculate a total Environmental Impact Index which focuses on each countries emissions.

The Emissions Index is based on a scale of 0-100 where 0 indicated very high emissions (very bad environmental impact) levels and 100 = very low emissions levels. All countries are ranked relative to each other to create global and regional rankings.

 

Social Index

The World Economics Social Index has equal weights for its components covering Health, Education and Poverty.

World Economics uses United Nations HID and World Bank data to create proxy indexes for Health, Education and Poverty. These Indexes are indexed on a scale of 0-100 using  so that each country can be compared.

Components:

- Life expectancy
- Mean years of schooling
- Population living in poverty

The resulting Social Index is used to rank each country. A value at the lower end of the scale indicates poor social factors whilst a value towards 100 indicates good factors.

 

Governance Index

The World Economics Governance Index is based on equally weighted and indexed data on the Rule of Law, Press Freedom, Political Rights and Corruption Perceptions.

Original data is derived from the World Justice Report, Reporters Without Borders (RSF), Freedom House and World Bank respectively.

In keeping with other indexes the data is transformed into a scale of 0-100 to gauge relative performance with other countries.

In all cases a score towards zero indicates poor governance, whilst a score tending towards 100 indicates good governance.