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The Materiality Challenge of ESG Ratings

Author

Listed:
  • Williams Zach

    (Mercy College, Dobbs Ferry, New York, USA)

Abstract

Research purpose. The ESG literature supports a positive correlation between a firm’s ESG performance and its financial performance; however, the details of this relationship are ambiguous, which has led to conflicting results in the literature. This article asserts that this ambiguity is largely related to the fact that ESG studies rarely consider the important issue of materiality. This article is an expanded replication of analysis by Williams ---amp--- Apollonio (2022), a study that called for deeper analysis of both materiality and the causal link between ESG ratings and financial performance.

Suggested Citation

  • Williams Zach, 2022. "The Materiality Challenge of ESG Ratings," Economics and Culture, Sciendo, vol. 19(2), pages 97-108, December.
    • Handle: RePEc:vrs:ecocul:v:19:y:2022:i:2:p:97-108:n:3
    DOI: 10.2478/jec-2022-0019
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    References listed on IDEAS

    as
    1. Emiel Duuren & Auke Plantinga & Bert Scholtens, 2016. "ESG Integration and the Investment Management Process: Fundamental Investing Reinvented," Journal of Business Ethics, Springer, vol. 138(3), pages 525-533, October.
    2. Ilze Zumente & Nataļja Lāce, 2021. "ESG Rating—Necessity for the Investor or the Company?," Sustainability, MDPI, vol. 13(16), pages 1-14, August.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    ESG Materiality; Abnormal Returns; Industry Classification;
    All these keywords.

    JEL classification:

    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions

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