Understanding Environmental, Social and Governance ratings

Overview of ESG

Environmental, Social and Governance (ESG) is an approach to sustainable investing.

Interest in ESG has been steadily rising over time. Environmental, Social, and Governance (ESG) is an approach to evaluating businesses that goes beyond the sole focus of shareholder return. Instead, an ESG framework takes into consideration the ecosystem, both internal and external, that businesses operate in and how they affect each other. 

The ESG criteria are a set of standards for a company’s operations that help you proactively assess potential investments.

The combined ESG score is an overall company score based on the reported information in the Environmental, Social and Governance pillars. It measures to what extent a company’s economic value is potentially at risk from unmanaged ESG factors.

Presented by Sustainalytics. For general information only.

How our platform can help you

We’ve connected with Sustainalytics, a Morningstar owned company, to provide you with ESG ratings for covered ASX 200 companies and selected ETFs available on our website and on iOS mobile devices.

To find a Company or Exchange Traded Fund’s (ETFs) ESG rating, simply search the company or ETF name or code via Quotes & Research > Research > Company on the website, or click More > Get a Quote via the Westpac Share Trading App.

Please note, not all companies and ETFs are covered due to the underlying company data not being accessible to accurately report on ESG.

ESG Risk Score Widget

3 Pillar Scores

The reported information category scores are rolled up into 3 pillar scores: Environmental, Social & Governance.

The ESG pillar score is a relative sum of the category weights, which vary per industry for the environmental and social categories. For Governance, the weights remain the same across all industries.

The pillar weights are normalised to percentages ranging between 0 and 100.



Environment is concerned with the biosphere and ecosystems of our planet, and the preservation of our natural world. This includes: 

  • Climate change
  • Carbon footprint, including Greenhouse gas (GHGs) emissions
  • Air pollution
  • Deforestation
  • Energy and water consumption
  • Waste output
  • Nature usage
  • Environmental policies


Social considerations include taking into account humans and our interdependencies – both inside and outside the organisation. This includes: 

  • Community relations, including the connection and impact on the local communities in which the company operates and serves
  • Comparative living wages
  • Diversity and inclusion percentage
  • Gender pay gap
  • Employee engagement and relations
  • Reskilling and training
  • Health and safety
  • Human rights
  • Charity
  • Wealth generation


Governance is about the logistics and operations of running a business or organisation. This includes: 

  • Executive’s pay ratio
  • Board composition, including diversity and structure
  • Quality of governing body
  • Ethics and anti-corruption policy
  • Tax paid
  • Ecosystem ESG


No, ESG ratings are complimentary and will be accessible to all customers for selected companies and ETFs. Not all companies and ETFs are covered due to the underlying company data not being accessible to report on ESG accurately.

Sustainalytics continually analyse company ratings. The ‘As at’ date at the bottom of the tool reflects the updated date of the ratings. For more information on the methodology of the underlying ratings, please view the Sustainalytics ratings methodology PDF.

For more information on the methodology of the underlying ratings, please view the Sustainalytics ratings methodology PDF.

Sustainalytics is a Morningstar company which compiles research, ratings and data from a variety of sources, including public corporate filings and reports, relevant media sources, reliable third-party sources such as acknowledged industry publications, specialised providers, and renowned non-governmental organisations.

ESG is important for a number of reasons, including fulfilling increased investor expectations, managing financial risks, responding to investor pressure, improving public relations, and being sustainable. Companies that perform well in terms of ESG may be better positioned for the long term and may be better able to plan for uncertainties.

A company's vulnerability to unmanaged environmental, social, and governance risks is shown by its ESG score. A score under 20 in the Sustainalytics system would likely be seen as favorable and be an indication that the company was adhering to best practices in reaching relevant ESG goals or had a lower exposure to unmanaged ESG risks.

  • What ESG factors matter most to you?
  • How much weight will you give these factors?
  • Does the company align with your investment goals or the ESG issues that matter most to you?

ESG practises are risk management practices, hence they have an impact on risk management. Effective ESG initiatives, for instance, can reduce a company’s risk to supply chain disruptions and increase corporate transparency. They might also discover that they can react to ESG incidents more effectively.

  1. Negligible (0-9.99 points)
  2. Low (10-19.99 points)
  3. Medium (20-29.99 points)
  4. High (30-39.99 points)
  5. Severe (40 and higher points)

ESG Risk Ratings are based on non-financial data. The rating takes into account environmental, social and governance variables, measuring sustainability and ethical impact of an investment in a business or company.

The purpose of the rating is to provide investors with a signal that indicates how much exposure to ESG risks and how well those risks are managed. The ratings provided improve the reliability of actions and risk assessment in making conscious investment decisions.

This information is intended to provide information for educational purposes only and is subject to change at anytime without notice.

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