The Inconsistency of ESG Ratings: Implications for Investors

Investors are increasingly scrutinizing the ESG performance of companies. This is a positive development - if CEOs know that investors evaluate them on ESG factors, not just short-term earnings, they'll prioritise these factors over quarterly profit. Indeed, research shows that …

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A question: is an average, aggregated, composite ESG score across the ESG ratings providers a meaningful number or is it more noise than signal. From the article:

"Different rating agencies disagree substantially on a company’s ESG performance. The correlation between ESG ratings across different providers is around 0.3. This contrasts with credit ratings, where the correlation between ratings by S&P and Moody’s is around 0.99."

How great would it be if there was transparency by the rating agencies all the way down to the source data and clear distinctions between objective/disputed facts and analysis.