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World Economics ESG Methodology

Updated: March 30, 2022

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 more resilience a country is showing to long-term, material environmental, social and governance (ESG) risk or actively working to reduce the impact of these factors.

Components:

  • World Economics Environmental Factors Index
  • World Economics Social Factors Index
  • World Economics Governance Factors Index

The index has a scale from 0-100 where 100 indicates excellent ESG credentials and 0 suggests very poor combined scores. All countries are ranked by the index score and graded against their performance relative to the other countries in the listing.



Environmental Impact 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 by using the standard deviation from the mean for each country. The implied Indexes are then averaged to calculate a total Environmental Impact Index which focuses on each countries emissions.

Components:

  • Total Carbon Emissions
  • Total Methane 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 Impact 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 spread on a scale of 0-100 using the standard deviation to the mean so that each country can be relatively compared.

Components:

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

The resulting Social Index is used to rank each country based on the highest scoring social indicators where 100 = Excellent and 0 = Unacceptable on a social level.



Governance Impact Index

World Economics has gathered together key indicators to monitor country governance. These indicators includes Ease of Doing Business, Rule of Law, Press Freedom, and Political Rights and Civil Liberties.

Original data is obtained from the World Bank, World Justice Report, Reporters Without Borders (RSF), and Freedom House 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 a negative or bad performance, whilst a score tending towards 100 indicates a positive or good performance on the scale.