Co-authored by James B. Anderson.
Institutional Shareholder Services (ISS) recently announced that, effective in late February or early March, it is replacing its Governance Risk Indicators (GRId) database with the new ISS Governance QuickScore (QuickScore), which is designed to quantitatively identify risks within a company.
Although GRId and QuickScore both attempt to measure governance risk, QuickScore is a more quantitatively driven system that searches for relationships between governance factors and important financial metrics, with an overlay that aligns qualitative aspects of governance with ISS policy. The quantitative methodology is based on ISS’s best practices as to numerous governance factors. Additionally, where GRId provided a color-coded scoring of qualitative risk factors, QuickScore assigns a numeric score based on four governance dimensions: board, compensation, shareholder rights and audit.
Initially, QuickScore will rate over 4,000 companies within 25 markets, including the 3,000 largest US companies by market cap, the 250 largest Canadian companies by market cap and United Kingdom, Europe, Japan and Asia Pacific companies in the MSCI-EAFE index. Companies rated by QuickScore have been granted access to ISS’s free data verification site, where they can review data ISS has collected on the QuickScore factors. Companies will have the ability to submit requests to ISS for data changes or updates through this site until February 15, at which time it will close until QuickScore is launched. ISS intends to begin including a covered company’s QuickScore in its proxy research reports beginning in late February or early March.
Additional information regarding QuickScore is available here.