Low Carbon Transition Rating
Event Indicators By ESG Theme
Each Event Indicator has its Own Set of Qualitative and Quantitative Criteria to Measure Financial Risk and Impact
Last Updated November 2025
Morningstar Sustainalytics assesses companies’ involvement in incidents with negative environmental, social and governance (ESG) implications. Controversy involvement is one key measure of ESG performance that may inform the investment decisions of our clients.
Event Indicators by Theme:
| Code | Indicator Name | Pillar | Description |
| EV.R.17 | Environmental Impact of Products Risk | Risk | This event indicator assesses the business risk of incidents related to the negative environmental impact of a company’s products or projects. Specific types of incidents generally include lawsuits, product bans, recalls or stakeholder scrutiny targeting products associated with known harmful impacts on the environment. For financial institutions, this includes the financing of infrastructure projects or companies whose operations result in negative environmental impacts. |
| EV.33 | Water Use | Controversies | This event indicator assesses incidents related to excessive water use associated with a company’s operations, or activities in water scarce areas. Specific incidents may include stakeholder criticism or community opposition regarding the volume of water used or a company's failure to obtain proper permits related to water use. |
| EV.1.33 | Water Use Impact | Impact | This event indicator assesses the environmental impact of incidents related to excessive water use associated with a company’s operations, or activities in water scarce areas. Specific incidents may include stakeholder criticism or community opposition regarding the volume of water used or a company's failure to obtain proper permits related to water use. |
| EV.R.33 | Water Use Risk | Risk | This event indicator assesses the business risk of incidents related to excessive water use associated with a company’s operations, or activities in water scarce areas. Specific incidents may include stakeholder criticism or community opposition regarding the volume of water used or a company's failure to obtain proper permits related to water use. |
| EV.39 | Emissions, Effluents and Waste - SC | Controversies | This event indicator assesses incidents related to the release or improper disposal of waste, effluents or emissions (excluding carbon dioxide) into the environment by company suppliers. Specific types of incidents include the degradation or contamination of land, discharges or releases into water or air emissions, other than carbon dioxide. Air emissions include the excessive release of volatile organic compounds, nitrous dioxide, or other harmful emissions into the atmosphere. Incidents can also include breaches of waste discharge permits or spills of crude oil, fuel or other effluents. |
| EV.1.39 | Emissions, Effluents and Waste - SC Impact | Impact | This event indicator assesses the environmental impact of incidents related to the release or improper disposal of waste, effluents or emissions (excluding carbon dioxide) into the environment by company suppliers. Specific types of incidents include the degradation or contamination of land, discharges or releases into water or air emissions, other than carbon dioxide. Air emissions include the excessive release of volatile organic compounds, nitrous dioxide, or other harmful emissions into the atmosphere. Incidents include breaches of waste discharge permits or spills of crude oil, fuel or other effluents. |
| EV.R.39 | Emissions, Effluents and Waste - SC Risk | Risk | This event indicator assesses the business risks of incidents related to the release or improper disposal of waste, effluents or emissions (excluding carbon dioxide) into the environment by company suppliers. Specific types of incidents include the degradation or contamination of land, discharges or releases into water or air emissions, other than carbon dioxide. Incidents include breaches of waste discharge permits or spills of crude oil, fuel or other effluents. |
| EV.40 | Energy Use and GHG Emissions - SC | Controversies | This event indicator assesses incidents related to the poor management or excess release of greenhouse gas (GHG) emissions from business activities in a company’s supply chain. Specific incidents may include non-compliance with or contravention of local or national environmental regulations. This includes both direct and indirect GHG emissions releases. Incidents involving opposition from stakeholders – including communities, NGOs and governments – are also relevant, particularly when the release of GHG emissions or consumption of energy result in negative reputational impacts or legal risks. |
| EV.1.40 | Energy Use and GHG Emissions - SC Impact | Impact | This event indicator assesses the societal impact of incidents related to the poor management or excess release of greenhouse gas (GHG) emissions from business activities in a company’s supply chain. Specific incidents may include non-compliance with or contravention of local or national environmental regulations. This includes both direct and indirect GHG emissions releases. Incidents involving opposition from stakeholders – including communities, NGOs and governments – are also relevant, particularly when the release of GHG emissions or consumption of energy result in negative reputational impacts or legal risks. |
| EV.R.40 | Energy Use and GHG Emissions - SC Risk | Risk | This event indicator assesses the business risk of incidents related to the poor management or excess release of greenhouse gas (GHG) emissions from a company’s supply chain. Specific incidents may include non-compliance with or contravention of local or national environmental regulations. This includes both direct and indirect GHG emissions releases. Incidents involving opposition from stakeholders – including communities, NGOs and governments – are also relevant, particularly when the release of GHG emissions or consumption of energy result in negative reputational impacts or legal risks. |
| EV.43 | Land Use and Biodiversity - SC | Controversies | This event indicator assesses incidents related to company suppliers' failures to adhere to sustainable land or sea use practices that result in negative effects on ecosystems and biodiversity. Specific incidents may include activities that result in negative impacts on terrestrial or aquatic ecosystems, including flora and fauna. Incidents may relate to reports of deforestation, land clearing, habitat loss or soil erosion as result of logging, oil palm plantations, cattle raising, infrastructure projects, or other activities. |
| EV.1.43 | Land Use and Biodiversity - SC Impact | Impact | This event indicator assesses the environmental impact of incidents related to company suppliers' failures to adhere to sustainable land or sea use practices that result in negative effects on ecosystems and biodiversity. Specific incidents may include activities that result in negative impacts on terrestrial or aquatic ecosystems, including flora and fauna. Incidents may relate to reports of deforestation, land clearing, habitat loss or soil erosion as result of logging, oil palm plantations, cattle raising, infrastructure projects, or other activities. |
| EV.R.43 | Land Use and Biodiversity - SC Risk | Risk | This event indicator assesses the business risk of incidents related to company suppliers' failures to adhere to sustainable land or sea use practices that result in negative effects on ecosystems and biodiversity. Specific incidents may include activities that result in negative impacts on terrestrial or aquatic ecosystems, including flora and fauna. Incidents may relate to reports of deforestation, land clearing, habitat loss or soil erosion as a result of logging, oil palm plantations, cattle raising, infrastructure projects, or other activities. |
| EV.45 | Water Use - SC | Controversies | This event indicator assesses incidents related to excessive water use associated with company suppliers, or activities by suppliers in water scarce areas. Specific incidents may include stakeholder criticism or community opposition regarding the volume of water used or a supplier's failure to obtain proper permits related to water use. |
| EV.1.45 | Water Use - SC Impact | Impact | This event indicator assesses the environmental impact of incidents related to excessive water use associated with company suppliers, or activities by suppliers in water scarce areas. Specific incidents may include stakeholder criticism or community opposition regarding the volume of water used or a supplier's failure to obtain proper permits related to water use. |
| EV.R.45 | Water Use - SC Risk | Risk | This event indicator assesses the business risk of incidents related to excessive water use associated with company suppliers, or activities by suppliers in water scarce areas. Specific incidents may include stakeholder criticism or community opposition regarding the volume of water used or a supplier's failure to obtain proper permits related to water use. |
| EV.46 | Carbon Impact of Products | Controversies | This event indicator assesses incidents related to carbon dioxide emissions associated with the use of a company’s products. Specific types of incidents include lawsuits filed by consumer or environmental groups, regulatory intervention or other types of stakeholder scrutiny of carbon emissions occurring during a product’s use phase. For financial institutions, incidents include the financing of projects or companies whose products result in significant carbon dioxide emissions. |
| EV.1.46 | Carbon Impact of Products Impact | Impact | This event indicator assesses the environmental impact of incidents related to carbon dioxide emissions associated with the use of a company’s products. Specific types of incidents include lawsuits filed by consumer or environmental groups, regulatory intervention or other types of stakeholder scrutiny of carbon emissions occurring during a product’s use phase. For financial institutions, incidents include the financing of projects or companies whose products result in significant carbon dioxide emissions. |
| EV.R.46 | Carbon Impact of Products Risk | Risk | This event indicator assesses the business risk of incidents related to carbon dioxide emissions associated with the use of a company’s products. Specific types of incidents include lawsuits filed by consumer or environmental groups, regulatory intervention or other types of stakeholder scrutiny of carbon emissions occurring during a product’s use phase. For financial institutions, incidents include the financing of projects or companies whose products result in significant carbon dioxide emissions. |
| EV.53 | Scarce Resource Use | Controversies | This event indicator assesses incidents related to a company's excessive use of resources (excluding water, energy and land) in its own operations or supply chain that results in resource depletion and threatens resource security. Specific incidents may include stakeholder criticism regarding the volume of resources used, engaging in stockpiling of resources, or the exploration of resources without proper permits or the extraction of resources in excess of permitted amounts. These actions contribute to accelerating resource depletion and threaten resource security. |
| EV.1.53 | Scarce Resource Use Impact | Impact | This event indicator assesses the environmental impact of incidents related to a company's excessive use of resources (excluding water, energy and land) in its own operations or supply chain, resulting in resource depletion and threatening resource security. Specific incidents may include stakeholder criticism regarding the volume of resources used, engaging in stockpiling of resources, or the exploration of resources without proper permits or the extraction of resources in excess of permitted amounts. These actions contribute to accelerating resource depletion and threaten resource security. |
| EV.R.53 | Scarce Resource Use Risk | Risk | This event indicator assesses the business risk of incidents related to a company's excessive use of resources (excluding water, energy and land) in its own operations or supply chain, resulting in resource depletion and threatening resource security. Specific incidents may include stakeholder criticism regarding the volume of resources used, engaging in stockpiling of resources, or the exploration of resources without proper permits or the extraction of resources in excess of permitted amounts. These actions contribute to accelerating resource depletion and threaten resource security. |
| Code | Indicator Name | Pillar | Description |
| EV.1 | Access to Basic Services | Controversies | This event indicator assesses incidents related to a company’s failure to ensure access to essential products or services, such as food, water and healthcare. Specific incidents may include pricing decisions that prevent access to essential products and services for disadvantaged communities and groups. Example include setting a price that is not justified by production, research, development or other expenses, or increasing the price of a product or service significantly once it is on the market. For medicines, price hikes of lifesaving drugs or drugs without alternatives on the market are particularly sensitive. Incidents may also involve efforts to prevent competition in order to maintain high prices or monopolize supply. |
| EV.I.1 | Access to Basic Services Impact | Impact | This event indicator assesses the societal impact of incidents related to a company’s failure to ensure access to essential products or services, such as food, water and healthcare. Specific incidents may include pricing decisions that prevent access to essential products and services for disadvantaged communities and groups, for example setting a price that is not justified by production, research, development or other expenses, or increasing the price of a product or service significantly once it is on the market. For medicines, price hikes of lifesaving drugs or drugs without alternatives on the market are particularly sensitive. Incidents may also involve efforts to prevent competition in order to maintain high prices or monopolize supply. |
| EV.R.1 | Access to Basic Services Risk | Risk | This event indicator assesses the business risk of incidents related to a company’s failure to ensure access to essential products or services, such as food, water and healthcare. Specific incidents may include pricing decisions that prevent access to essential products and services for disadvantaged communities and groups, for example, setting a price that is not justified by production, research, development or other expenses, or increasing the price of a product or service significantly once it is on the market. For medicines, price hikes for lifesaving drugs or drugs that have no alternative on the market are particularly sensitive. Incidents may also involve efforts to prevent competition in order to maintain high prices or monopolize supply. |
| EV.4 | Anti-Competitive Practices | Controversies | This event indicator assesses incidents related to attempts to prevent, reduce or restrict competition in a market. Such attempts are primarily made through alleged violations of antitrust regulation which can have negative effects on end-consumers’ access to goods and services. Specific incidents may include efforts to abuse a dominant market position in order to limit competition. Incidents may also include allegations of collusion, market manipulation, price fixing, product dumping, dividing up territory, exclusive dealing agreements, price discrimination, or any other practice aimed at limiting fair competition in a market. |
| EV.I.4 | Anti-Competitive Practices Impact | Impact | This event indicator assesses the societal impact of incidents related to attempts to prevent, reduce or restrict competition in a market. Such attempts are primarily through alleged violations of antitrust regulation which can have negative effects on end-consumers’ access to goods and services. Specific incidents may include efforts to abuse a dominant market position in order to limit competition. Incidents may include allegations of collusion, market manipulation, price fixing, product dumping, dividing up territory, exclusive dealing agreements, price discrimination, or any other practice aimed at limiting fair competition in a market. |
| EV.R.4 | Anti-Competitive Practices Risk | Risk | This event indicator assesses the business risk of incidents related to attempts to prevent, reduce or restrict competition in a market, primarily through alleged violations of antitrust regulation. Specific incidents may include efforts to abuse a dominant market position in order to limit competition. Incidents may include allegations of collusion, market manipulation, price fixing, product dumping, dividing up territory, exclusive dealing agreements, price discrimination, or any other practice aimed at limiting fair competition in a market. |
| EV.10 | Community Relations | Controversies | This event indicator assesses incidents related to corporate activities that negatively impact local communities (including Indigenous communities), and how a company responds to and manages conflicts with affected groups. Specific incidents include disputes over the ownership of natural resources, such as land and water, or a company’s failure to manage conflicts related to its operations. The latter may take the form of disproportionate use of force against communities, forced resettlements, and legal disputes with permitting authorities. Responses from communities, such as protests or demonstrations, can result from conflicts or escalate them. |
| EV.I.10 | Community Relations Impact | Impact | This event indicators assesses the societal impact of incidents related to corporate activities that negatively impact local communities (including Indigenous communities), and how a company responds to and manages conflicts with affected groups. Specific incidents include disputes over the ownership of natural resources, such as land and water, or a company’s failure to manage conflicts related to its operations. The latter may take the form of disproportionate use of force against communities, forced resettlements, and legal disputes with permitting authorities. Responses from communities, such as protests or demonstrations, can result from conflicts or escalate them. |
| EV.R.10 | Community Relations Risk | Risk | This event indicator assesses the business risks of incidents related to corporate activities that negatively impact local communities (including Indigenous communities), and how a company responds to and manages conflicts with affected groups. Specific incidents include disputes over the ownership of natural resources, such as land and water, or a company’s failure to manage conflicts related to its operations. The latter may take the form of disproportionate use of force against communities, forced resettlements, and legal disputes with permitting authorities. Responses from communities, such as protests or demonstrations, can result from conflicts or escalate them. |
| EV.20 | Occupational Health and Safety | Controversies | This event indicator assesses incidents related to workers' health and safety within a company's operations. Specific types of incidents include workplace accidents caused by handling hazardous machinery, working at dangerous locations, contamination from working with toxic chemicals, or the use of improper equipment or ineffective safety procedures at work. |
| EV.I.20 | Occupational Health and Safety Impact | Impact | This event indicator assesses the societal impact of incidents related to workers' health and safety within a company's operations. Specific types of incidents include workplace accidents caused by handling hazardous machinery, working at dangerous locations, contamination from working with toxic chemicals, or the use of improper equipment or ineffective safety procedures at work. |
| EV.R.20 | Occupational Health and Safety Risk | Risk | This event indicator assesses the business risk of incidents related to workers' health and safety within a company's operations. Specific types of incidents include workplace accidents caused by handling hazardous machinery, working at dangerous locations, contamination from working with toxic chemicals, or the use of improper equipment or ineffective safety procedures at work. |
| EV.21 | Intellectual Property | Controversies | This event indicator assesses incidents related to breaches of intellectual property rights, such as patents, copyright, industrial design rights, trademarks or trade secrets. Specific types of incidents include any corporate practice that results in a breach of another company’s intellectual property, such as a patent, copyright or trademark. Incidents are often recorded following a lawsuit or investigation. Incidents involving the misappropriation of trade secrets typically involve the unauthorized sharing of proprietary information in order to gain an unfair advantage. |
| EV.I.21 | Intellectual Property Impact | Impact | This event indicator assesses the societal impact of incidents related to breaches of intellectual property rights, such as patents, copyright, industrial design rights, trademarks, or trade secrets. Specific types of incidents include any corporate practice that results in a breach of another company’s intellectual property, such as a patent, copyright or trademark. Incidents are often recorded following a lawsuit or investigation. Incidents involving the misappropriation of trade secrets typically involve the unauthorized sharing of proprietary information in order to gain an unfair advantage. |
| EV.R.21 | Intellectual Property Risk | Risk | This event indicator assesses the business risk of incidents related to breaches of intellectual property rights, such as patents, copyright, industrial design rights, trademarks, or trade secrets. Specific types of incidents include any corporate practice that results in a breach of another company’s intellectual property, such as a patent, copyright or trademark. Incidents are often recorded following a lawsuit or investigation. Incidents involving the misappropriation of trade secrets typically involve the unauthorized sharing of proprietary information in order to gain an unfair advantage. |
| EV.22 | Labour Relations | Controversies | This event indicator assesses incidents related to poor compensation, discrimination and harassment in the workplace, or to unfair working conditions that are raised by a company's own employees or their representatives, such as labour unions. Specific types of incidents include issues arising from workplace discrimination and harassment, disputes with unions regarding working hours and wages, or violent disputes with the labour force and labour rights activists that potentially lead to employee dismissals, injuries or fatalities. This indicator may also include incidents over company retaliation, such as threats against workers and activists who speak up for their rights. |
| EV.I.22 | Labour Relations Impact | Impact | This event indicator assesses the societal impact of incidents related to poor compensation, discrimination and harassment in the workplace, or to unfair working conditions that are raised by a company's own employees or their representatives, such as labour unions. Specific types of incidents include issues arising from workplace discrimination and harassment, disputes with unions regarding working hours and wages, or violent disputes with the labour force and labour rights activists that potentially lead to employee dismissals, injuries or fatalities. This indicator may also include incidents over company retaliation, such as threats against workers and activists who speak up for their rights. |
| EV.R.22 | Labour Relations Risk | Risk | This event indicator assesses the business risk of incidents related to poor compensation, discrimination and harassment in the workplace or to unfair working conditions that are raised by a company's own employees or their representatives, such as labour unions. Specific types of incidents include issues arising from workplace discrimination and harassment, disputes with unions regarding working hours and wages, or violent disputes with the labour force and labour rights activists that potentially lead to employee dismissals, injuries or fatalities. This indicator may also include incidents over company retaliation, such as threats against workers and activists who speak up for their rights. |
| EV.24 | Marketing Practices | Controversies | This event indicator assesses incidents related to false or deceptive marketing practices, such as using misleading or incorrect statements in promotional materials or targeting vulnerable consumers. Specific types of incidents include the publication of misleading or incorrect statements, disregarding or downplaying potential product risks, or the use of aggressive marketing practices. Incidents may also involve the targeting of vulnerable populations, such as minorities or those from low-income communities, in an effort to increase product sales at the expense of customers’ wellbeing. |
| EV.I.24 | Marketing Practices Impact | Impact | This event indicator assesses the societal impact of incidents related to false or deceptive marketing practices, such as using misleading or incorrect statements in promotional materials or targeting vulnerable consumers. Specific types of incidents include the use of misleading or incorrect statements in promotional materials, disregarding or downplaying potential product risks, or the use of aggressive marketing practices. Incidents may also involve the targeting of vulnerable populations, such as minorities or those from low-income communities, in an effort to increase product sales at the expense of customers’ wellbeing. |
| EV.R.24 | Marketing Practices Risk | Risk | This event indicator assesses the business risk of incidents related to false or deceptive marketing practices, such as using misleading or incorrect statements in promotional materials or targeting vulnerable consumers. Specific types of incidents include the use of misleading or incorrect statements in promotional materials, disregarding or downplaying potential product risks, or the use of aggressive marketing. Incidents may also involve the targeting of vulnerable populations, such as minorities or those from low-income communities, in an effort to increase product sales at the expense of customers’ wellbeing. |
| EV.25 | Media Ethics | Controversies | This event indicator assesses incidents related to breaches in editorial standards, content or general ethical principles for the media, including broadcast, print, digital and other types of media outlets. Specific types of incidents include sourcing information by illegal or unscrupulous means, publishing false or misleading content or hosting content that is considered inappropriate, such as racist content, hate speech and propaganda. |
| EV.I.25 | Media Ethics Impact | Impact | This event indicator assesses the societal impact of incidents related to breaches in editorial standards, content or general ethical principles for the media, including broadcast, print, digital and other types of media outlets. Specific types of incidents include sourcing information by illegal or unscrupulous means, publishing false or misleading content or hosting content that is considered inappropriate, such as racist content, hate speech and propaganda. |
| EV.R.25 | Media Ethics Risk | Risk | This event indicator assesses the business risk of incidents related to breaches in editorial standards, content or general ethical principles for the media, including broadcast, print, digital and other types of media outlets. Specific types of incidents include sourcing information by illegal or unscrupulous means, publishing false or misleading content or hosting content that is considered inappropriate, such as racist content, hate speech and propaganda. |
| EV.27 | Data Privacy and Security | Controversies | This event indicator assesses incidents related to breaches of customer data privacy, unauthorized disclosure, collection or use of personal data, or failure to protect customer data. Specific examples include incidents in which companies experience cyberattacks that result in compromised or stolen personal data, deficiencies in data privacy security programmes being uncovered or failures in data protection systems and controls. Additionally, relevant incidents may involve the unauthorized use, processing and sale of personal data to third parties without the knowledge or consent of the subjects of the data. |
| EV.I.27 | Data Privacy and Security Impact | Impact | This event indicator assesses the societal impact of incidents related to breaches of customer data privacy, unauthorized disclosure, collection or use of personal data, or failure to protect customer data. Specific examples include incidents in which companies experience cyberattacks that result in compromised or stolen personal data, deficiencies in data privacy security programmes being uncovered or failures in data protection systems and controls. Additionally, relevant incidents may involve the unauthorized use, processing and sale of personal data to third parties without the knowledge or consent of the subjects of the data. |
| EV.R.27 | Data Privacy and Security Risk | Risk | This event indicator assesses the business risk of incidents related to breaches of customer data privacy, unauthorized disclosure, collection or use of personal data, or failure to protect customer data. Specific examples include incidents in which companies experience cyberattacks that result in compromised or stolen personal data, deficiencies in data privacy security programmes being uncovered or failures in data protection systems and controls. Additionally, relevant incidents may involve the unauthorized use, processing and sale of personal data to third parties without the knowledge or consent of the subjects of the data. |
| EV.I.28 | Quality and Safety Impact | Impact | This event indicator assesses the societal impact of incidents related to quality or safety issues associated with a company’s products or services that may result in negative impacts on the safety or wellbeing of consumers or society. Specific types of incidents include product defects that affect the quality or effectiveness of a product or, in more serious cases, put the safety and wellbeing of customers at risk. Other examples include unfair client treatment, discrimination in accessing products and/or services, and overcharging. Incidents may be recorded as a result of consumer lawsuits, product recalls, regulatory investigations, or reports by consumer watchdogs or other stakeholders. |
| EV.R.28 | Quality and Safety Risk | Risk | This event indicator assesses the business risk of incidents related to quality or safety issues associated with a company’s products or services that may result in negative impacts on the safety or wellbeing of consumers or society. Specific types of incidents include product defects that affect the quality or effectiveness of a product or, in more serious cases, put the safety and wellbeing of customers at risk. Other examples include unfair client treatment, discrimination in accessing products and/or services, and overcharging. Incidents may be recorded as a result of consumer lawsuits, product recalls, regulatory investigations, or reports by consumer watchdogs or other stakeholders. |
| EV.28 | Quality and Safety | Controversies | This event indicator assesses incidents related to quality or safety issues associated with the company’s products or services that may result in negative impacts on the safety or wellbeing of consumers or society. Specific types of incidents include product defects that affect the quality or effectiveness of a product or, in more serious cases, put the safety and wellbeing of customers at risk. Other examples include unfair client treatment, discrimination in accessing products and/or services, and overcharging. Incidents may be recorded as a result of consumer lawsuits, product recalls, regulatory investigations, or reports by consumer watchdogs or other stakeholders. |
| EV.30 | Sanctions | Controversies | This event indicator assesses incidents related to corporate activities that result in a breach of international sanctions, issued by supranational organizations or individual countries. Specific types of incidents include company actions that constitute a breach of international sanctions, by conducting business in sanctioned countries or with sanctioned entities; for example, processing financial transactions for banks in sanctioned countries or operating in a country subject to sanctions. |
| EV.I.30 | Sanctions Impact | Impact | This event indicator assesses the societal impact of incidents related to corporate activities that result in a breach of international sanctions, issued by supranational organizations or individual countries. Specific types of incidents include company actions that constitute a breach of international sanctions, by conducting business in sanctioned countries or with sanctioned entities; for example, processing financial transactions for banks in sanctioned countries or operating in a country subject to sanctions. |
| EV.R.30 | Sanctions Risk | Risk | This event indicator assesses the business risk of incidents related to corporate activities that result in a breach of international sanctions, issued by supranational organizations or individual countries. Specific types of incidents include company actions that constitute a breach of international sanctions, by conducting business in sanctioned countries or with sanctioned entities; for example, processing financial transactions for banks in sanctioned countries or operating in a country subject to sanctions. |
| EV.32 | Social Impact of Products | Controversies | This event indicator assesses incidents related to the negative societal impact of a company’s products. Specific types of incidents include lawsuits, product bans, recalls or stakeholder scrutiny targeting products associated with known physical or human health hazards. The types of products involved varies, depending on the industry. In extreme cases, a company’s product can be partially or completely banned from a market. For financial institutions, for example, this includes the financing of infrastructure projects or companies whose operations have negative impacts on society. |
| EV.I.32 | Social Impact of Products Impact | Impact | This event indicator assesses incidents related to the negative societal impact of a company’s products. Specific types of incidents include lawsuits, product bans, recalls or stakeholder scrutiny targeting products associated with known physical or human health hazards. The types of products involved will depend on the industry. In extreme cases, products can be partially or completely banned from the market. For financial institutions, for example, this includes the financing of infrastructure projects or companies whose operations have negative impacts on society. |
| EV.R.32 | Social Impact of Products Risk | Risk | This event indicator assesses the business risk of incidents related to the negative impact of a company’s products. Specific types of incidents include lawsuits, product bans, recalls or stakeholder scrutiny targeting products associated with known physical or human health hazards. The types of products involved will depend on the industry. In extreme cases, products can be partially or completely banned from the market. For financial institutions, for example, this includes the financing of infrastructure projects or companies whose operations have negative impacts on society. |
| EV.34 | Weapons | Controversies | This event indicator assesses incidents related to the production or sale of weapons that are subject to arms export regulations, or otherwise controversial weapons, as well as the sale of weapons to conflict-affected and high-risk areas (CAHRAs). Specific types of incidents linked to these practices include regulatory investigations, lawsuits, or stakeholder complaints related to the production or sale of weapons. Examples of countries subject to embargos are Sudan, South Sudan, Myanmar, Syria, Yemen, Egypt, Iraq and Afghanistan, and armed groups subject to embargos include paramilitary groups, rebel groups and drug cartels. Examples of controversial weapons include anti-personnel mines, chemical and biological weapons, cluster munitions, depleted uranium ammunition, nuclear weapons and white phosphorus. |
| EV.I.34 | Weapons Impact | Impact | This event indicator assesses the societal impact of incidents related to the production or sale of weapons that are subject to arms export regulations, or otherwise controversial weapons, as well as the sale of weapons to conflict-affected and high-risk areas (CAHRAs). Specific types of incidents linked to these practices include regulatory investigations, lawsuits, or stakeholder complaints related to the production or sale of weapons. Examples of countries subject to embargos are Sudan, South Sudan, Myanmar, Syria, Yemen, Egypt, Iraq and Afghanistan, and armed groups subject to embargos include paramilitary groups, rebel groups and drug cartels. Examples of controversial weapons include anti-personnel mines, chemical and biological weapons, cluster munitions, depleted uranium ammunition, nuclear weapons and white phosphorus. |
| EV.R.34 | Weapons Risk | Risk | This event indicator assesses the business risk of incidents related to the production or sale of weapons that are subject to arms export regulations, or otherwise controversial weapons, as well as the sale of weapons to conflict-affected and high-risk areas (CAHRAs). Specific types of incidents linked to these practices include regulatory investigations, lawsuits, or stakeholder complaints related to the production or sale of weapons. Examples of countries subject to embargos are Sudan, South Sudan, Myanmar, Syria, Yemen, Egypt, Iraq and Afghanistan, and armed groups subject to embargos include paramilitary groups, rebel groups and drug cartels. Examples of controversial weapons include anti-personnel mines, chemical and biological weapons, cluster munitions, depleted uranium ammunition, nuclear weapons and white phosphorus. |
| EV.38 | Community Relations - SC | Controversies | This event indicator assesses incidents related to the activities of company suppliers that negatively impact local communities (including Indigenous communities), and how a company responds to and manages conflicts with affected groups. Specific incidents in a company's supply chain include disputes over the ownership of natural resources, such as land and water, or the failure to manage conflicts with local communities. The latter can take the form of disproportionate use of force against communities, forced resettlements and legal disputes with permitting authorities. Responses from communities, such as protests or demonstrations, can result from conflicts or escalate them. |
| EV.I.38 | Community Relations - SC Impact | Impact | This event indicator assesses the societal impact of incidents related to the activities of company suppliers that negatively impact local communities (including Indigenous communities), and how a company responds to and manages conflicts with affected groups. Specific incidents in a company's supply chain include disputes over the ownership of natural resources, such as land and water, or the failure to manage conflicts with local communities. The latter takes the form of disproportionate use of force against communities, forced resettlements, and legal disputes with permitting authorities. Responses from communities, such as protests or demonstrations, can result from conflicts or escalate them. |
| EV.R.38 | Community Relations - SC Risk | Risk | This event indicator assesses the business risk of incidents related to the activities of company suppliers that negatively impact local communities (including Indigenous communities), and how the company responds to and manages conflicts with affected groups. Specific incidents in a company's supply chain include disputes over the ownership of natural resources, such as land and water, or the failure to manage conflicts with local communities. The latter may take the form of disproportionate use of force against communities, forced resettlements, and legal disputes with permitting authorities. Responses from communities, such as protests or demonstrations, can result from conflicts or escalate them. |
| EV.42 | Labour Relations - SC | Controversies | This event indicator assesses incidents related to poor compensation, discrimination and harassment in the workplace or to unfair working conditions that are raised by the employees of company suppliers or their representatives, such as labour unions. Specific incidents may include issues arising from workplace discrimination and harassment, disputes with unions regarding working hours and wages, or violent disputes with the labour force and labour rights activists that potentially lead to employee dismissals, injuries or fatalities. This indicator may also include incidents over employer retaliation, such as threats against workers and activists who speak up for their rights. |
| EV.I.42 | Labour Relations - SC Impact | Impact | This event indicator assesses the societal impact of incidents related to poor compensation, discrimination and harassment in the workplace or to unfair working conditions that are raised by the employees of company suppliers or their representatives, such as labour unions. Specific incidents may include issues arising from workplace discrimination and harassment, disputes with unions regarding working hours and wages, or violent disputes with the labour force and labour rights activists that potentially lead to employee dismissals, injuries or fatalities. This indicator may also include incidents over employer retaliation, such as threats against workers and activists who speak up for their rights. |
| EV.R.42 | Labour Relations - SC Risk | Risk | This event indicator assesses the business risk of incidents related to poor compensation, discrimination and harassment in the workplace or to unfair working conditions that are raised by the employees of company suppliers or their representatives, such as labour unions. Specific incidents may include issues arising from workplace discrimination and harassment, disputes with unions regarding working hours and wages, or violent disputes with the labour force and labour rights activists that potentially lead to employee dismissals, injuries or fatalities. This indicator may also include incidents over company retaliation, such as threats against workers and activists who speak up for their rights. |
| EV.44 | Occupational Health and Safety - SC | Controversies | This event indicator assesses incidents related to workers' health and safety within a company's supply chain. Specific types of incidents include workplace accidents caused by handling hazardous machinery, working at dangerous locations, contamination from working with toxic chemicals, or the use of improper equipment or ineffective safety procedures at work. |
| EV.I.44 | Occupational Health and Safety - SC Impact | Impact | This event indicator assesses the societal impact of incidents related to workers' health and safety within a company's supply chain. Specific types of incidents include workplace accidents caused by handling hazardous machinery, working at dangerous locations, contamination from working with toxic chemicals, or the use of improper equipment or ineffective safety procedures at work. |
| EV.R.44 | Occupational Health and Safety - SC Risk | Risk | This event indicator assesses the business risk of incidents related to workers' health and safety within a company's supply chain. Specific types of incidents include workplace accidents caused by handling hazardous machinery, working at dangerous locations, contamination from working with toxic chemicals or the use of improper equipment or ineffective safety procedures at work. |
| EV.47 | Employees - Human Rights | Controversies | This event indicator assesses incidents related to violations of employees' human rights within a company's own operations. Specific types of incidents include a company's exploitation or inhumane treatment of its employees, such as forced labour, slavery or child labour. Violations of human rights include the abuse of workers’ vulnerability, restriction of movement, wage withholding, abusive working conditions, poor living conditions, and requiring excessive overtime work. Incidents may also include a company's mistreatment of vulnerable workers, physical and sexual violence, or signing employees on contracts that contain misleading terms. |
| EV.I.47 | Employee Human Rights – Impact | Impact | This event indicator assesses the societal impact of incidents related to violations of employees' human rights within a company's own operations. Specific types of incidents include a company's exploitation or inhumane treatment of its employees, such as forced labour, slavery or child labour. Violations of human rights include the abuse of workers’ vulnerability, restriction of movement, wage withholding, abusive working conditions, poor living conditions, and requiring excessive overtime work. Incidents may also include a company's mistreatment of vulnerable workers, physical and sexual violence, or signing employees on contracts that contain misleading terms. |
| EV.R.47 | Employee Human Rights – Risk | Risk | This event indicator assesses the business risk of incidents related to violations of employees' human rights within a company's own operations. Specific types of incidents include a company's exploitation or inhumane treatment of its employees, such as forced labour, slavery or child labour. Violations of human rights include the abuse of workers’ vulnerability, restriction of movement, wage withholding, abusive working conditions, poor living conditions, and requiring excessive overtime work. Incidents may also include a company's mistreatment of vulnerable workers, physical and sexual violence, or signing employees on contracts that contain misleading terms. |
| EV.48 | Society - Human Rights | Controversies | This event indicator assesses incidents related to a company's direct or indirect involvement in severe human rights violations or abuses of stakeholders, other than employees. Incidents can also relate to a company’s involvement with corrupt governments, dictatorial regimes or parties that have a track record of human rights violations or are engaged in severe human rights violations or abuses. Incidents may also include stakeholder criticism, protests, lawsuits or investigations over the company’s involvement in human rights abuses. |
| EV.I.48 | Society - Human Rights Impact | Impact | This event indicator assesses the societal impact of incidents related to a company's direct or indirect involvement in severe human rights violations or abuses of stakeholders other than employees. Incidents can also relate to a company’s involvement with corrupt governments, dictatorial regimes or parties that have a track record of human rights violations or are engaged in severe human rights violations or abuses. Incidents may also include stakeholder criticism, protests, lawsuits or investigations over the company’s involvement in human rights abuses. |
| EV.R.48 | Society - Human Rights Risk | Risk | This event indicator assesses the business risks of incidents related to a company's direct or indirect involvement in severe human rights violations or abuses of stakeholders other than employees. Incidents can also relate to a company’s involvement with corrupt governments, dictatorial regimes or parties that have a track record of human rights violations or are engaged in severe human rights violations or abuses. Incidents may also include stakeholder criticism, protests, lawsuits or investigations over the company’s involvement in human rights abuses. |
| EV.49 | Employees - Human Rights - SC | Controversies | This event indicator assesses incidents related to violations of employees' human rights within a company's supply chain. Specific types of incidents include the exploitation or inhumane treatment of employees, such as forced labour, slavery or child labour. Violations of human rights include the abuse of workers’ vulnerability, restriction of movement, wage withholding, abusive working conditions, poor living conditions, and requiring excessive overtime work. Incidents may also include the mistreatment of vulnerable workers, physical and sexual violence, or signing employees on contracts that contain misleading terms. |
| EV.I.49 | Employees - Human Rights - SC Impact | Impact | This event indicator assesses the societal impact of incidents related to violations of employees' human rights within a company's supply chain. Specific types of incidents include the exploitation or inhumane treatment of employees, such as forced labour, slavery or child labour. Violations of human rights include the abuse of workers’ vulnerability, restriction of movement, wage withholding, abusive working conditions, poor living conditions, and requiring excessive overtime work. Incidents may also include the mistreatment of vulnerable workers, physical and sexual violence, or signing employees on contracts that contain misleading terms. |
| EV.R.49 | Employees - Human Rights - SC Risk | Risk | This event indicator assesses the business risk of incidents related to violations of employees' human rights within a company's supply chain. Specific types of incidents include a company's exploitation or inhumane treatment of its employees, such as forced labour, slavery or child labour. Violations of human rights include the abuse of workers’ vulnerability, restriction of movement, wage withholding, abusive working conditions, poor living conditions, and requiring excessive overtime work.Incidents may also include the mistreatment of vulnerable workers, physical and sexual violence, or signing employees on contracts that contain misleading terms. |
| EV.50 | Society - Human Rights - SC | Controversies | This event indicator assesses incidents related to the direct or indirect involvement of company suppliers in severe human rights violations or abuses of stakeholders other than employees. Incidents can also relate to a supplier's involvement with corrupt governments, dictatorial regimes or parties that have a track record of human rights violations or are engaged in severe human rights violations or abuses. Incidents may also include stakeholder criticism, protests, lawsuits or investigations over the supplier’s involvement in human rights abuses. |
| EV.I.50 | Society - Human Rights - SC Impact | Impact | This event indicator assesses the societal impact of incidents related to the direct or indirect involvement of company suppliers in severe human rights violations or abuses of stakeholders other than employees. Incidents can also relate to a supplier’s involvement with corrupt governments, dictatorial regimes or parties that have a track record of human rights violations or are engaged in severe human rights violations or abuses. Incidents may also include stakeholder criticism, protests, lawsuits or investigations over the company’s involvement in human rights abuses. |
| EV.R.50 | Society - Human Rights - SC Risk | Risk | This event indicator assesses the business risks of incidents related to the direct or indirect involvement of company suppliers in severe human rights violations or abuses of stakeholders other than employees. Incidents can also relate to a supplier’s involvement with corrupt governments, dictatorial regimes or parties that have a track record of human rights violations or are engaged in severe human rights violations or abuses. Incidents may also include stakeholder criticism, protests, lawsuits or investigations over the company’s involvement in human rights abuses. |
| Code | Indicator Name | Pillar | Description | ||
| EV.2 | Accounting and Taxation | Controversies | This event indicator assesses incidents related to accounting irregularities, tax evasion (the use of illegal means to evade taxes) and tax avoidance (the use of legal means to reduce tax liabilities). Specific types of incidents include accounting irregularities or fraud through, for example, the misstating, manipulation or misrepresentation of information in financial or accounting statements. These incidents may also include efforts to avoid taxes through aggressive tax planning, intra-group financing, treaty shopping, debt shifting, or any other strategy meant to minimize a company’s tax liability. | ||
| EV.I.2 | Accounting and Taxation Impact | Impact | This event indicator assesses the societal impact of incidents related to accounting irregularities, tax evasion (use of illegal means to evade taxes) and tax avoidance (the use of legal means to reduce tax liabilities). Specific types of incidents include accounting irregularities or fraud through, for example, the misstating, manipulation or misrepresentation of information in financial or accounting statements. They may also include efforts to avoid or evade taxes through aggressive tax planning, tax evasion, intra-group financing, treaty shopping, debt shifting, or any other strategy meant to minimize a company’s tax liability. | ||
| EV.R.2 | Accounting and Taxation Risk | Risk | This event indicator assesses the business risk of incidents related to accounting irregularities, tax evasion (use of illegal means to evade taxes) and tax avoidance (the use of legal means to reduce tax liabilities). Specific types of incidents include accounting irregularities or fraud through, for example, the misstatement, manipulation or misrepresentation of information in financial or accounting statements. They may also include efforts to avoid or evade taxes through aggressive tax planning, tax evasion, intra-group financing, treaty shopping, debt shifting, or any other strategy meant to minimize a company’s tax liability. | ||
| EV.3 | Animal Welfare | Controversies | This event indicator assesses incidents related to a company’s failure to ensure the wellbeing of animals kept for human consumption, animal testing or other purposes. Specific types of incidents include animals at fish farms, slaughterhouses, recreational parks, or testing laboratories for the development of medicines, chemicals, cosmetics or other products. Incidents may involve poor housing or transport, insufficient feeding, inhumane slaughtering methods, or other circumstances that cause unnecessary suffering. | ||
| EV.I.3 | Animal Welfare Impact | Impact | This event indicator assesses the societal impact of the company’s failure to ensure the wellbeing of animals kept for human consumption, animal testing or other purposes. Specific types of incidents include animals at fish farms, slaughterhouses, recreational parks, or testing laboratories for the development of medicines, chemicals, cosmetics or other products. Incidents may involve poor housing or transport, insufficient feeding, inhumane slaughtering methods, or unnecessary suffering. | ||
| EV.R.3 | Animal Welfare Risk | Risk | This event indicator assesses the business risk of incidents related to a company’s failure to ensure the wellbeing of animals raised for human consumption, animal testing or other purposes. Specific types of incidents include animals at fish farms, slaughterhouses, recreational parks, or testing laboratories for the development of medicines, chemicals, cosmetics, or other products. Incidents may involve poor housing or transport, insufficient feeding, inhumane slaughtering methods, or causing unnecessary suffering. | ||
| EV.6 | Bribery and Corruption | Controversies | This event indicator assesses incidents related to bribes paid or accepted by a company, either to or from government officials or other private entities (with or without intermediaries) with the purpose of securing an unfair advantage over other companies. Specific types of incidents include companies engaging in unlawful transactions with government officials or other private entities, either directly or through their employees. Incidents may include facilitation of payments, in an attempt to influence the actions of the recipient, and practices such as graft, kickbacks, inducement and bid-rigging. | ||
| EV.I.6 | Bribery and Corruption Impact | Impact | This event indicator assesses the societal impact of incidents related to bribes paid or accepted by a company either to or from government officials or other private entities (with or without intermediaries) with the purpose of securing an unfair advantage over other companies. Specific types of incidents include companies engaging in unlawful transactions with government officials or other private entities, either directly or through their employees. Incidents may include facilitation of payments, in an attempt to influence the actions of the recipient, and practices such as graft, kickbacks, inducement and bid-rigging. | ||
| EV.R.6 | Bribery and Corruption Risk | Risk | This event indicator assesses the business risk of incidents related to bribes that are paid or accepted by a company to or from government officials or other private entities to secure an unfair advantage over other companies. Specific types of incidents include the company engaging in unlawful transactions with government officials or other private entities, either directly or through its employees. Incidents may include facilitation of payments, in an attempt to influence the actions of the recipient, and practices such as graft, kickbacks, inducement and bid-rigging. | ||
| EV.7 | Business Ethics | Controversies | This event indicator assesses incidents related to ethical violations committed by a company or its employees. Specific types of incidents include fraud or enabling fraud, money laundering, manipulation, misuse of power or of corporate assets, conflicts of interest, and regulatory circumvention or non-compliance with regulations. | ||
| EV.I.7 | Business Ethics Impact | Impact | This event indicator assesses the societal impact of incidents related to ethical violations committed by a company or its employees. Specific types of incidents include fraud or enabling fraud, money laundering, manipulation, misuse of power or of corporate assets, conflicts of interest, and regulatory circumvention or non-compliance with regulations. | ||
| EV.R.7 | Business Ethics Risk | Risk | This event indicator assesses the business risks of incidents related to ethical violations committed by a company or its employees. Specific types of incidents include fraud or enabling fraud, money laundering, manipulation, misuse of power or of corporate assets, and conflicts of interest. | ||
| EV.13 | Corporate Governance | Controversies | This event indicator assesses incidents related to breaches of good corporate governance practices and their effects on a company's shareholders’ rights. Strong corporate governance is crucial for protecting shareholders’ rights and ensuring that businesses operate ethically and sustainably, benefiting investors and society. Specific types of incidents include any action that jeopardizes a company’s governance structure or oversight, such as executive misconduct, excessive remuneration, insufficient disclosure, controversial reorganizations or acquisitions, or controversial ownership structures, such as cross-shareholdings. Incidents may also include related-party transactions or controversies related to succession planning. | ||
| EV.I.13 | Corporate Governance Impact | Impact | This event indicator assesses the societal impact of incidents stemming from breaches of good corporate governance practices and their effects on the company's shareholders’ rights. Strong corporate governance is crucial for protecting shareholders’ rights and ensuring that businesses operate ethically and sustainably, benefiting investors and society. Specific types of incidents include any action that jeopardizes a company’s governance structure or oversight, such as executive misconduct, excessive remuneration, insufficient disclosure, controversial reorganizations or acquisitions, or controversial ownership structures, such as cross-shareholdings. Incidents may also include related-party transactions or controversies related to succession planning. | ||
| EV.R.13 | Corporate Governance Risk | Risk | This event indicator assesses the business risks of incidents related to companies’ breaches of good corporate governance practices. Specific types of incidents include any action that jeopardizes a company’s governance structure or oversight, such as executive misconduct, excessive remuneration, insufficient disclosure, controversial reorganizations or acquisitions, or controversial ownership structures, such as cross-shareholdings. Incidents may also include related-party transactions or controversies related to succession planning. | ||
| EV.23 | Lobbying and Public Policy | Controversies | This event indicator assesses incidents related to lobbying or public spending that is perceived to violate ethical or legal standards. Specific types of incidents include lobbying activities associated with an alleged conflict of interest, undue advantage, or a breach of ethical standards. Incidents may be recorded based on a lawsuit, or a report from a watchdog or related organization. | ||
| EV.I.23 | Lobbying and Public Policy Impact | Impact | This event indicator assesses the societal impact of incidents related to lobbying or public spending that is perceived to violate ethical or legal standards. Specific types of incidents include lobbying activities associated with an alleged conflict of interest, undue advantage, or a breach of ethical standards. Incidents may be recorded based on a lawsuit or a report from a watchdog or related organization. | ||
| EV.R.23 | Lobbying and Public Policy Risk | Risk | This event indicator assesses the business risk of incidents related to lobbying or public spending that is perceived to violate ethical or legal standards. Specific types of incidents include lobbying activities associated with an alleged conflict of interest, undue advantage, or a breach of ethical standards. Incidents may be recorded based on a lawsuit or a report from a watchdog or related organization. | ||
| EV.29 | Resilience | Controversies | This event indicator assesses incidents related to the ability of financial institutions to withstand negative shocks arising from changes in economic conditions and, therefore, avoid negative impacts on taxpayers and other stakeholders. Specific types of incidents include concerns about the financial stability and capital adequacy of financial institutions, and corresponding risks to business continuity and potential government bailouts. This includes reports of excessive exposure to non-performing assets, the inability to pass stress tests carried out by regulators, or liquidity deficits that result in restrictions being imposed on clients. | ||
| EV.I.29 | Resilience Impact | Impact | This event indicator assesses the societal impact of incidents related to the ability of financial institutions to withstand negative shocks arising from changes in economic conditions and, therefore, avoid negative impacts on taxpayers and other stakeholders. Specific types of incidents include concerns about the financial stability and capital adequacy of financial institutions, and corresponding risks to business continuity and potential government bailouts. This includes reports of excessive exposure to non-performing assets, the inability to pass stress tests carried out by regulators, or liquidity deficits that result in restrictions being imposed on clients. | ||
| EV.R.29 | Resilience Risk | Risk | This event indicator assesses the business risk of incidents related to the ability of financial institutions to withstand negative shocks arising from changes in economic conditions and, therefore, avoid negative impacts on taxpayers and other stakeholders. Specific types of incidents include concerns about the financial stability and capital adequacy of financial institutions, and corresponding risks to business continuity and potential government bailouts. This includes reports of excessive exposure to non-performing assets, the inability to pass stress tests carried out by regulators, or liquidity deficits that result in restrictions being imposed on clients. | ||
| EV.35 | Animal Welfare - SC | Controversies | This event indicator assesses incidents related to the failure of company suppliers to ensure the wellbeing of animals raised for human consumption, animal testing or other purposes. Specific types of incidents include animals at fish farms, slaughterhouses, recreational parks, or testing laboratories for the development of medicines, chemicals, cosmetics or other products. Incidents may involve poor housing or transport, insufficient feeding, inhumane slaughtering methods, or other circumstances that cause unnecessary suffering. | ||
| EV.I.35 | Animal Welfare - SC Impact | Impact | This event indicator assesses the societal impact of incidents related to the failure of company suppliers to ensure the wellbeing of animals raised for human consumption, animal testing or other purposes. Specific types of incidents include animals at fish farms, slaughterhouses, recreational parks, or testing laboratories for the development of medicines, chemicals, cosmetics, or other products. Incidents may involve poor housing or transport, insufficient feeding, inhumane slaughtering methods, or causing unnecessary suffering. | ||
| EV.R.35 | Animal Welfare - SC Risk | Risk | This event indicator assesses the business risk of incidents related to the failure of company suppliers to ensure the wellbeing of animals kept for human consumption, animal testing or other purposes. Specific types of incidents include animals at fish farms, slaughterhouses, recreational parks, or testing laboratories for the development of medicines, chemicals, cosmetics, or other products. Incidents may involve poor housing or transport, insufficient feeding, inhumane slaughtering methods, or causing unnecessary suffering. | ||
| EV.36 | Bribery and Corruption - SC | Controversies | This event indicator assesses incidents related to bribes paid or accepted by company suppliers, either to or from government officials or other private entities, with the purpose of securing an unfair advantage over competitors. Specific incidents in a company's supply chain may include engaging in unlawful transactions with government officials or other private entities, either directly or through supplier employees. Other incidents may include facilitation of payments in an attempt to influence the actions of the recipient, and practices such as graft, kickbacks, inducement and bid-rigging. | ||
| EV.I.36 | Bribery and Corruption - SC Impact | Impact | This event indicator assesses the societal impact of incidents related to bribes paid or accepted by company suppliers, either to or from government officials or other private entities, with the purpose of securing an unfair advantage over other companies. Specific incidents in a company's supply chain may include engaging in unlawful transactions with government officials or other private entities, either directly or through supplier employees. Other incidents include facilitation of payments in an attempt to influence the actions of the recipient, and practices such as graft, kickbacks, inducement and bid-rigging. | ||
| EV.R.36 | Bribery and Corruption - SC Risk | Risk | This event indicator assesses the business risk of incidents related to bribes paid or accepted by company suppliers, either to or from government officials or other private entities, with the purpose of securing an unfair advantage over other companies. Specific incidents in a company's supply chain may include engaging in unlawful transactions with government officials or other private entities, either directly or through supplier employees. Incidents may include facilitation of payments in an attempt to influence the actions of the recipient, and practices such as graft, kickbacks, inducement and bid-rigging. | ||
| EV.37 | Business Ethics - SC | Controversies | This event indicator assesses incidents related to ethical violations committed by company suppliers. Specific incidents may include fraud or enabling fraud, money laundering, manipulation, misuse of power or of corporate assets, and conflicts of interest, among others. Additionally, relevant incidents are those where a supplier itself, or through the actions of its employees, engages in intellectual property violations, tax evasion or avoidance, anti-competitive practices, unethical lobbying or breaches of sanctions. | ||
| EV.I.37 | Business Ethics - SC Impact | Impact | This event indicator assesses the societal impact of incidents related to ethical violations committed by company suppliers. Specific incidents may include fraud or enabling fraud, money laundering, manipulation, misuse of power or of corporate assets, and conflicts of interest, among others. Additionally, relevant incidents are those where a supplier itself or through the actions of its employees engages in intellectual property violations, tax evasion or avoidance, anti-competitive practices, unethical lobbying or breaches of sanctions. | ||
| EV.R.37 | Business Ethics - SC Risk | Risk | This event indicator assesses the business risk of incidents related to ethical violations committed by company suppliers. Specific incidents may include fraud or enabling fraud, money laundering, manipulation, misuse of power or of corporate assets, and conflicts of interest, among others. Additionally, relevant incidents are those where a supplier itself or through the actions of its employees engages in intellectual property violations, tax evasion or avoidance, anti-competitive practices, unethical lobbying or breaches of sanctions. |
Building Blocks of the Controversy Rating
The Controversy Ratings reflect a company’s level of involvement in ESG driven issues that are material to stakeholders and the environment or pose a financially material risk to the company.
The first building block is an Incident, which represents a singular negative issue where the company has been involved.
Incidents on the same topic are collected and combined to inform an Event on that topic. For each event, we assess two dimensions: Risk and Impact, each providing a distinct signal. ‘Risk’ speaks to the financial risk that the event poses for a company, whereas ‘Impact’ focuses on the negative impacts of the event on the environment and society.
Finally, Controversy is a collection of multiple events that have the same theme and represent the building block of the rating.
Defining Incidents and Events
INCIDENT
An incident is the starting point of a Controversy Rating. It is defined as any company activity that yields adverse effects on stakeholders and/or the environment. Incidents provide an initial indication about the materiality of the adverse event that is reported in the media.
Incidents are monitored through a range of media sources. We analyze cases if they fall within one of 58 incident types that address a broad array of environmental, social, and governance issues: Ranging from Emissions, Effluents and Waste to Data Privacy and Security and Business ethics. If an incident relates to a company’s Supply Chain, this will be marked as such, to distinguish supply chain incidents from similar incidents that have occurred in the company.
We assess the stakeholder and environmental materiality of incidents by evaluating the negative environmental and/or social impacts resulting from the activity. This materiality assessment is done based on the research guidance on the severity and exceptionality of the incidents, as well as the accountability of the company in question. The incidents can arise from a singular negative occurrence (e.g., a mining explosion) or ongoing activity (e.g., the use of child labor in manufacturing).
EVENT
Event Indicators provide a Rating Category for 41 different thematic areas, based on an assessment of the underlying incidents, both from an impact as well as risk perspective, providing clear insight into double materiality. Each material Incident is mapped to the relevant Event Indicator built on their thematic relationship.
The outcome of the assessment for each Event Indicator is expressed using one of the six Rating Categories, as further explained for Impact Event Categories on page 10 and for Risk Event Categories on page 14. It reflects the highest Rating Category of the underlying Impact and Risk assessments that follow the same six categories.
The impact assessment of events, on the one hand, assesses the impact associated to the company on its external environment, which includes both the environment as well as stakeholders from a social perspective. It is assessed on four factors: Scale, Scope, Remediation and Role.
The risk assessment of events, on the other hand, considers the business risk to the company that the event might cause. It aggregates the business risk into financially material amounts from up to five ‘risk’ factors: Operational, financial, legal, regulatory and compliance, and reputational. The financial materiality risk assessment also considers the financial health of the company involved in the controversy.