Inrate’s rating methodology has been carefully developed to reveal real impact based on what a company does, not just what it says. It aligns seamlessly with the expectations of leading regulations such as the EU Taxonomy, CSRD and SFDR and enables investors to uncover sustainability impact that would otherwise be hidden in their portfolio.


Sustainable finance means more than just considering ESG risks; sustainable investment products need to show how they contribute to social or environmental goals. This in turn requires a sound understanding of the positive and negative impacts of the underlying investments.

Financial market participants still struggle to gain a complete picture of a company’s sustainability performance amid the abundance of traditional ESG ratings that focus on self-reported company information and the risk perspective, rather than actual sustainability.

ESG Impact Rating Methodology

Inrate’s ESG Impact Rating methodology goes beyond reported data provided by companies about their ESG policies and initiatives. It takes an impact angle based on externalities across entire product lifecycles as well as third-party reported adverse business practices to capture the sustainability performance of an entity, comprehensively. Thus, the final rating is a composite reflection derived by combining scores from the Product & Services (P&S) Assessment, the CSR Assessment, and the Adverse Business Practices.

P&S Assessment

The P&S assessment is primarily based on Inrate’s proprietary impact matrix, which consists of over 400 different business activities assessed based on sustainability dimensions, resulting in an impact value for environment (EI) and social aspects (SI). Inrate’s impact matrix is based on scientific data and research, such as empirical economic data (input–output tables), academic studies, and houses data pertaining to the global average sustainability impacts, i.e., over the entire life-cycle of the given products & services. EI and SI encompass essential components such as climate change and biodiversity, as well as impacts on consumers and broader society.

On top of these global average values, Inrate has established more than 80 activity-specific parameters to enhance the precision of ratings by taking into account the deviations in business activities from the generic averages.

Activity level EI and SI scores are aggregated based on their share of the company’s revenue to result in consolidated entity level EI and SI scores.

CSR Assessment

The CSR assessment revolves around reported data and evaluates the measures adopted by companies such as policies, targets, initiatives, etc. to manage sustainability-related aspects. It utilizes over 170 general and subsector-specific core indicators for approximately 150 subsectors. Each core indicator results in a score from 0-1, based on one or several indicator features, capturing the details and maturity of the company’s management of sustainability. These scores are further assigned appropriate weighting for their respective sustainability aspect, resulting in individual E CSR, S CSR, Labor (L), and Governance (G) scores.

Adverse Business Practices

After the P&S and the CSR assessment, the resulting scores in the sustainability aspects EI, E CSR, SI, S CSR, L, and G are offset with adverse business practices captured through third-party sources (controversies), which are typically not reported by the companies themselves. This part assesses negative impacts first on an event and then on a company basis, using a set of 38 indicators. First, the negative impact of events is assessed taking into account the scale of the event, its severity, the duration of consequences, and the stakeholders impacted by the event.

Then company impact is derived by assessing the level of involvement, causes of the event, and potential corrective actions undertaken. This then results in individual company scores for each event. Subsequently, these scores are aggregated at the indicator level incorporating ranking discounts. Additionally, a time discount is automatically applied, with events being fully discounted after 6 years, based on the recording date of the controversial event. The affected stakeholder and the causes of event features mentioned above determine from which of the 6 sustainability aspects of the rating the resulting indicator score will be subtracted.

Final Assessment

To enhance granularity and to avoid a one-size-fits-all approach, Inrate’s business activities, parameters, and CSR indicators are tailored to align with Inrate’s 25 distinct service sectors.1

Different aspect weights are allocated to EI, SI, E CSR, S CSR, L, and G based on the designated sub-sector to calculate the final impact score. This culminates in an absolute 12-point rating system ranging from A+ to D-, facilitating the comparison of companies both within and across sectors.

Quality and Innovation Process

To uphold the robustness and relevance of the rating methodology in a constantly evolving world, comprehensive sector studies, as well as regular committee and innovation workshops including our expert committee are conducted to upgrade the method, rating modules, and the impact matrix. This demonstrates Inrate's commitment to staying science-based and relevant to cater to the evolving focus areas (e.g. biodiversity) of financial market participants. Regular rating model changes are conducted to incorporate findings of studies and workshops in the method and its application to keep the ratings up to the pressing issues of our time. Governance mechanisms comprising product and method committees, quality team, operations team, product team, and research team are established to maintain or even improve the quality of both ratings and methodologies for our clients.

1 In contrast to existing industry-based sectors (which would e.g., put fossil fuel extraction in a different sector than utilities), service sectors comprise all economic activities in a value chain leading to a certain service to society, e.g. the provision of energy (including both extraction of fuel and production of electricity from it). This allows assessments and benchmarking based on a systemic view by taking into account possible substitutions and the transformation needs of our economy to achieve sustainable development.