How ESG Ratings Are Assigned — And Why They Differ
If one agency calls the same company 'excellent' and another calls it 'poor,' which should you believe? The striking disagreement among ESG ratings is exactly that problem.
What ESG Scoring Is
ESG scoring measures a company's environmental (E), social (S), and governance (G) performance with indicators and expresses it as a rating or score.
Several agencies — MSCI, Sustainalytics, S&P Global — assign ratings using their own methodologies. These ratings are used as criteria for including stocks in ESG funds and indices.
For instance, a rule like 'exclude companies with a low ESG rating' means the rating effectively determines the investment universe.
Why Results Differ by Agency
The biggest controversy over ESG ratings is 'disagreement across agencies.'
According to one study ('Aggregate Confusion'), the correlation between different ESG rating agencies averages only about 0.54. Compared with the roughly 0.92 correlation between Moody's and S&P credit ratings, that is markedly lower.
In fact, some analyses find that MSCI and Sustainalytics point in opposite directions on the same company in about 30% of cases.
The causes come down to three things: 1. scope (which issues are deemed important), 2. measurement (which indicators are used to measure the same issue), and 3. weighting (how much each item is reflected) — all of which differ by agency.
Source: Oxford Review of Finance 'Aggregate Confusion: The Divergence of ESG Ratings' (correlation about 0.54, credit ratings about 0.92), ScienceDirect 'ESG rating disagreement.' Figures may vary by sample and period.
What Investors Should Keep in Mind
The fact that ESG ratings diverge does not mean 'ESG investing is bad'; it means you should not blindly trust the ratings.
1. You should check whose rating it is and which methodology it follows. 2. An ESG rating does not guarantee financial performance or future returns. Ratings and returns are separate. 3. A high rating does not automatically make a company 'good,' nor does a low rating make it 'bad.'
ESG is just one piece of reference information; it is not the answer to an investment decision by itself.
This article does not recommend any specific ESG fund or stock; its purpose is to explain the structure and limits of the rating systems.
Preguntas frecuentes
Q. If an ESG rating is high, are returns high too?
You cannot conclude that. ESG ratings and investment returns are separate, and research findings are mixed. A rating is a reference indicator for sustainability, not a guarantee of returns.
Q. Why do credit ratings agree while ESG ratings do not?
Credit ratings assess a relatively clear target — 'ability to repay debt.' ESG, by contrast, has criteria for what is 'good' that differ by agency, leading to large divergence.
Páginas relacionadas
📋 Los resultados se basan en datos históricos; las rentabilidades pasadas no garantizan rentabilidades futuras.
📋 Este servicio se ofrece con fines educativos para ayudarte a entender la inversión, no como asesoramiento de inversión.