GMI Ratings maintains broad coverage of the environmental, social, governance (ESG) and accounting-related risks affecting the performance of public companies. The firm publishes two proprietary ratings of public companies:
- Environmental, Social and Governance (ESG) ratings for nearly 6,000 companies worldwide incorporate 150 ESG KeyMetrics® to help investors assess the sustainable investment value of public companies. Socially Responsible Investment screens will be added to GMI’s suite of products in the Fall of 2013 through a partnership with Ethix SRI Advisors.
- Accounting and Governance Risk (AGR®) ratings for approximately 18,000 public companies worldwide are based on risk factors most clearly associated with performance. AGR ratings reflect accounting and governance practices statistically associated with an elevated risk of securities class-action litigation, material financial restatements, SEC enforcement actions, bankruptcies and other events likely to cause sharp drops in equity value.
In addition, the Forensic Alpha ModelTM (FAM) helps investors predict stock returns using forensic accounting and governance-related measures of issuer risk. The FAM has shown a strong out-of-sample ability to predict equity returns globally, across industries, large-cap and small-cap portfolios.
The ESG and AGR ratings complement traditional security analysis and financial risk modeling. They help GMI clients identify and quantify extra-financial risks stemming from variables not yet incorporated into dominant valuation methodologies and approaches to capital allocation. The strong performance characteristics of FAM are consistent with academic research on the value of forensic models in identifying an elevated risk of major share price drops.
GMI Ratings updates its data and research regularly based on latest news, regulatory filings and high-impact events that warrant rating revisions. We also implement periodic algorithmic adjustments to our ESG, AGR, and FAM models to continually improve their predictive power in light of emerging trends.