IDEAS home Printed from https://ideas.repec.org/a/bla/bstrat/v26y2017i3p316-330.html

The Consolidation of the ESG Rating Industry as an Enactment of Institutional Retrogression

Author

Listed:
  • Emma Avetisyan
  • Kai Hockerts

Abstract

The socially responsible investing (SRI) movement has been aiming to create lasting institutional change by infusing the investment sector with new norms and values. Environmental, social and governance (ESG) rating agencies have emerged in response to the needs of SRI actors for reliable data on the social performance of firms. Since 2005, the ESG rating industry has witnessed a number of national and cross‐border consolidations. Based on a set of 37 interviews and secondary data, the paper explores the driving forces behind this consolidation as well as its impact. Our focus is on four ESG rating agencies, based in the United States, the United Kingdom, France and Switzerland. We conclude that in effect consolidation has at least partially resulted in institutional retrogression, whereby the traditional norms and values have reaffirmed their primacy, thereby somewhat negating the institutional change sought by the SRI movement. Copyright © 2016 John Wiley & Sons, Ltd and ERP Environment

Suggested Citation

  • Emma Avetisyan & Kai Hockerts, 2017. "The Consolidation of the ESG Rating Industry as an Enactment of Institutional Retrogression," Business Strategy and the Environment, Wiley Blackwell, vol. 26(3), pages 316-330, March.
    • Handle: RePEc:bla:bstrat:v:26:y:2017:i:3:p:316-330
    DOI: 10.1002/bse.1919
    as

    Download full text from publisher

    File URL: https://doi.org/10.1002/bse.1919
    Download Restriction: no
    File URL: https://libkey.io/10.1002/bse.1919?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Sandra A. Waddock & Samuel B. Graves, 1997. "The Corporate Social Performance–Financial Performance Link," Strategic Management Journal, Wiley Blackwell, vol. 18(4), pages 303-319, April.
    2. David Collison & George Cobb & David Power & Lorna Stevenson, 2009. "FTSE4Good: exploring its implications for corporate conduct," Accounting, Auditing & Accountability Journal, Emerald Group Publishing Limited, vol. 22(1), pages 35-58, January.
    3. Steven Scalet & Thomas Kelly, 2010. "CSR Rating Agencies: What is Their Global Impact?," Journal of Business Ethics, Springer, vol. 94(1), pages 69-88, June.
    4. Jeremy Galbreath, 2013. "ESG in Focus: The Australian Evidence," Journal of Business Ethics, Springer, vol. 118(3), pages 529-541, December.
    5. Jean-Pascal Gond & Jacques Igalens, 2005. "Measuring Corporate Social Performance in France. A Critical and Empirical Analysis of ARESE Data," Post-Print halshs-00005808, HAL.
    6. Wim Vandekerckhove & Jos Leys & Dirk Braeckel, 2008. "A Speech-Act Model for Talking to Management. Building a Framework for Evaluating Communication within the SRI Engagement Process," Journal of Business Ethics, Springer, vol. 82(1), pages 77-91, September.
    7. Ronald Hill & Thomas Ainscough & Todd Shank & Daryl Manullang, 2007. "Corporate Social Responsibility and Socially Responsible Investing: A Global Perspective," Journal of Business Ethics, Springer, vol. 70(2), pages 165-174, January.
    8. Andrew M. Pettigrew, 1990. "Longitudinal Field Research on Change: Theory and Practice," Organization Science, INFORMS, vol. 1(3), pages 267-292, August.
    9. Magali Delmas & Vered Doctori Blass, 2010. "Measuring corporate environmental performance: the trade‐offs of sustainability ratings," Business Strategy and the Environment, Wiley Blackwell, vol. 19(4), pages 245-260, May.
    10. T. Lawrence & R. Suddaby & B. Leca, 2011. "Institutional work - Re-focusing institutional studies of organization," Post-Print hal-00802293, HAL.
    11. Thomas Koellner & Olaf Weber & Marcus Fenchel & Roland Scholz, 2005. "Principles for sustainability rating of investment funds," Business Strategy and the Environment, Wiley Blackwell, vol. 14(1), pages 54-70, January.
    12. Benjamin Richardson, 2009. "Keeping Ethical Investment Ethical: Regulatory Issues for Investing for Sustainability," Journal of Business Ethics, Springer, vol. 87(4), pages 555-572, July.
    13. Aaron K. Chatterji & Michael W. Toffel, 2010. "How firms respond to being rated," Strategic Management Journal, Wiley Blackwell, vol. 31(9), pages 917-945, September.
    14. Emma Avetisyan & Michel Ferrary, 2013. "Dynamics of Stakeholders’ Implications in the Institutionalization of the CSR Field in France and in the United States," Journal of Business Ethics, Springer, vol. 115(1), pages 115-133, June.
    15. Aaron K. Chatterji & David I. Levine & Michael W. Toffel, 2009. "How Well Do Social Ratings Actually Measure Corporate Social Responsibility?," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 18(1), pages 125-169, March.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Emma Avetisyan & Kai Hockerts, 2017. "Consolidation of the ESG Rating Industry as an Enactment of Institutional Retrogression," Post-Print hal-01695693, HAL.
    2. Ellen Pei‐yi Yu & Christine Qian Guo & Bac Van Luu, 2018. "Environmental, social and governance transparency and firm value," Business Strategy and the Environment, Wiley Blackwell, vol. 27(7), pages 987-1004, November.
    3. Elbasha, Tamim & Avetisyan, Emma, 2018. "A framework to study strategizing activities at the field level: The example of CSR rating agencies," European Management Journal, Elsevier, vol. 36(1), pages 38-46.
    4. Elena Escrig-Olmedo & María Ángeles Fernández-Izquierdo & Idoya Ferrero-Ferrero & Juana María Rivera-Lirio & María Jesús Muñoz-Torres, 2019. "Rating the Raters: Evaluating how ESG Rating Agencies Integrate Sustainability Principles," Sustainability, MDPI, vol. 11(3), pages 1-16, February.
    5. María Jesús Muñoz‐Torres & María Ángeles Fernández‐Izquierdo & Juana M. Rivera‐Lirio & Elena Escrig‐Olmedo, 2019. "Can environmental, social, and governance rating agencies favor business models that promote a more sustainable development?," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 26(2), pages 439-452, March.
    6. Jonathan Luffarelli & Amrou Awaysheh, 2018. "The Impact of Indirect Corporate Social Performance Signals on Firm Value: Evidence from an Event Study," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 25(3), pages 295-310, May.
    7. Tao, Hu & Zhuang, Shan & Xue, Rui & Cao, Wei & Tian, Jinfang & Shan, Yuli, 2022. "Environmental Finance: An Interdisciplinary Review," Technological Forecasting and Social Change, Elsevier, vol. 179(C).
    8. Lee, Gilsoo & Cho, Sam Yul & Arthurs, Jonathan & Lee, Eun Kyung, 2020. "Celebrity CEO, identity threat, and impression management: Impact of celebrity status on corporate social responsibility," Journal of Business Research, Elsevier, vol. 111(C), pages 69-84.
    9. Li, Qingyuan & Tsang, Albert & Wu, Qiong & Xiong, Xi, 2025. "ESG rating agencies and investors’ reactions to earnings news," Journal of Contemporary Accounting and Economics, Elsevier, vol. 21(1).
    10. Patricia Crifo & Elena Escrig-Olmedo & Nicolas Mottis, 2019. "Corporate Governance as a Key Driver of Corporate Sustainability in France: The Role of Board Members and Investor Relations," Journal of Business Ethics, Springer, vol. 159(4), pages 1127-1146, November.
    11. Felipe Arias Fogliano de Souza Cunha & Erick Meira & Renato J. Orsato, 2021. "Sustainable finance and investment: Review and research agenda," Business Strategy and the Environment, Wiley Blackwell, vol. 30(8), pages 3821-3838, December.
    12. Gaurav Talan & Gagan Deep Sharma, 2019. "Doing Well by Doing Good: A Systematic Review and Research Agenda for Sustainable Investment," Sustainability, MDPI, vol. 11(2), pages 1-16, January.
    13. Jacob Brower & Peter A. Dacin, 2020. "An Institutional Theory Approach to the Evolution of the Corporate Social Performance – Corporate Financial Performance Relationship," Journal of Management Studies, Wiley Blackwell, vol. 57(4), pages 805-836, June.
    14. Ludovic Cassely & Christophe Revelli & Sami Ben Larbi & Alain Lacroux, 2020. "Sustainable development drivers of companies: An international and multilevel analysis," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 27(5), pages 2028-2043, September.
    15. Del Bosco, Barbara & Misani, Nicola, 2016. "The effect of cross-listing on the environmental, social, and governance performance of firms," Journal of World Business, Elsevier, vol. 51(6), pages 977-990.
    16. Mussa Hussaini & Ugo Rigoni & Paolo Perego, 2023. "The strategic choice of payment method in takeovers: The role of environmental, social and governance performance," Business Strategy and the Environment, Wiley Blackwell, vol. 32(1), pages 200-219, January.
    17. Rui Coelho & Shital Jayantilal & Joao J. Ferreira, 2023. "The impact of social responsibility on corporate financial performance: A systematic literature review," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 30(4), pages 1535-1560, July.
    18. Olivier Boiral & David Talbot & Marie‐Christine Brotherton, 2020. "Measuring sustainability risks: A rational myth?," Business Strategy and the Environment, Wiley Blackwell, vol. 29(6), pages 2557-2571, September.
    19. Jian Zhou & Xiaodong Lei & Jianglong Yu, 2024. "ESG rating divergence and corporate green innovation," Business Strategy and the Environment, Wiley Blackwell, vol. 33(4), pages 2911-2930, May.
    20. Yuehua Xu & Guangtao Zeng, 2021. "Corporate social performance aspiration and its effects," Asia Pacific Journal of Management, Springer, vol. 38(4), pages 1181-1207, December.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bla:bstrat:v:26:y:2017:i:3:p:316-330. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Wiley Content Delivery (email available below). General contact details of provider: http://onlinelibrary.wiley.com/journal/10.1002/(ISSN)1099-0836 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.