ESG ratings: the road ahead

Lopez, Claude and Contreras, Oscar and Bendix, Joseph (2020): ESG ratings: the road ahead.

Abstract

In this study, we show that using a common set of variables would partially resolve inconsistencies and the lack of comparability across rating providers that often confuse investors. Furthermore, we dissociate the impact of the rating agencies’ different focus on “E”, “S” or “G” from that of using different data. While the former, if properly disclosed, can be useful as it allows investors to choose what rating will be more in line with their preferences, the latter necessarily requires harmonization of the data collected.

• Item Type: MPRA Paper
• Language: English
• Keywords: ESG ratings, machine learning, Environmental, Social governance,
• Subjects: C - Mathematical and Quantitative Methods > C1 - Econometric and Statistical Methods and Methodology: General > C14 - Semiparametric and Nonparametric Methods: General; C - Mathematical and Quantitative Methods > C5 - Econometric Modeling; G - Financial Economics > G1 - General Financial Markets > G10 - General; G - Financial Economics > G1 - General Financial Markets > G11 - Portfolio Choice ; Investment Decisions; G - Financial Economics > G1 - General Financial Markets > G14 - Information and Market Efficiency ; Event Studies ; Insider Trading; G - Financial Economics > G3 - Corporate Finance and Governance > G30 - General

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