Review of Finance

Aggregate Confusion: The Divergence of ESG Ratings

Florian Berg ¹

Julian F Kölbel ^{1, 2}

Roberto Rigobon ¹

Show full list: 3 authors

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MIT Sloan , USA |

University of Zurich , Switzerland |

Publication type: Journal Article

Publication date: 2022-05-23

Oxford University Press

Journal: Review of Finance

scimago Q1

SJR: 7.769

CiteScore: 7.8

Impact factor: 5.6

ISSN: 15723097, 1573692X

DOI: 10.1093/rof/rfac033

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Economics and Econometrics

Finance

Accounting

Abstract

This paper investigates the divergence of environmental, social, and governance (ESG) ratings based on data from six prominent ESG rating agencies: Kinder, Lydenberg, and Domini (KLD), Sustainalytics, Moody’s ESG (Vigeo-Eiris), S&P Global (RobecoSAM), Refinitiv (Asset4), and MSCI. We document the rating divergence and map the different methodologies onto a common taxonomy of categories. Using this taxonomy, we decompose the divergence into contributions of scope, measurement, and weight. Measurement contributes 56% of the divergence, scope 38%, and weight 6%. Further analyzing the reasons for measurement divergence, we detect a rater effect where a rater’s overall view of a firm influences the measurement of specific categories. The results call for greater attention to how the data underlying ESG ratings are generated.

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GOST |

Cite this

GOST Copy

Berg F. et al. Aggregate Confusion: The Divergence of ESG Ratings // Review of Finance. 2022.

GOST all authors (up to 50) Copy

Berg F., Kölbel J. F., Rigobon R. Aggregate Confusion: The Divergence of ESG Ratings // Review of Finance. 2022.

RIS |

Cite this

RIS Copy

TY - JOUR

DO - 10.1093/rof/rfac033

UR - https://doi.org/10.1093/rof/rfac033

TI - Aggregate Confusion: The Divergence of ESG Ratings

T2 - Review of Finance

AU - Berg, Florian

AU - Kölbel, Julian F

AU - Rigobon, Roberto

PY - 2022

DA - 2022/05/23

PB - Oxford University Press

SN - 1572-3097

SN - 1573-692X

ER -

BibTex

Cite this

BibTex (up to 50 authors) Copy

@article{2022_Berg,

author = {Florian Berg and Julian F Kölbel and Roberto Rigobon},

title = {Aggregate Confusion: The Divergence of ESG Ratings},

journal = {Review of Finance},

year = {2022},

publisher = {Oxford University Press},

month = {may},

url = {https://doi.org/10.1093/rof/rfac033},

doi = {10.1093/rof/rfac033}

}

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Publisher

Oxford University Press

Journal

Review of Finance

scimago Q1

SJR

7.769

CiteScore

7.8

Impact factor

5.6

ISSN

15723097 (Print)

1573692X (Electronic)