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Do ESG Ratings of Chinese Firms Converge or Diverge? A Comparative Analysis Based on Multiple Domestic and International Ratings

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  • Yunfu Zhu

    (College of Economics and Management, Nanjing Forestry University, No. 159 Longpan Road, Xuanwu District, Nanjing 210037, China)

  • Haoling Yang

    (College of Economics and Management, Nanjing Forestry University, No. 159 Longpan Road, Xuanwu District, Nanjing 210037, China)

  • Ma Zhong

    (College of Economics and Management, Nanjing Forestry University, No. 159 Longpan Road, Xuanwu District, Nanjing 210037, China)

Abstract

Since the Chinese economy has transitioned to a sustainable model, the Chinese socially responsible investment (SRI) market has expanded rapidly, which has deeply stimulated the development of environmental, social, and governance (ESG) ratings for Chinese firms. Domestic agencies, such as SynTao, Rankins (RKS), Sino-Securities (SSII), and China Alliance of Social Value Investment (CASVI), and international agencies, such as Bloomberg, FTSE Russell (FTSE), and Morgan Stanley Capital International (MSCI), have launched their own ESG rating systems. These emerging ratings may provide users of information with more diverse references; however, if their results are too divergent, they may also confuse users. To what extent do these ESG rating results in the Chinese market converge or diverge? Aiming to answer this question, we used Hushen 300 index firms in 2019 as the initial sample, and selected 195 firms covered by the above seven ratings for the analysis. Firstly, by comparing the overlap in the top 100 lists of these sample firms, we found that the list overlap rate between each pair of ratings was between 66.36% and 82.35%; however, only 35% of the firms were listed in the top 100 of all seven ratings. Furthermore, the Pearson correlation analysis showed that the correlation coefficients between each pair of ratings ranged from 0.057 to 0.736, and the average was only 0.411. These results suggest a wide divergence in the ESG rating results for Chinese firms. We suggest that information users need to consider a more diverse and comprehensive perspective when utilizing these ratings.

Suggested Citation

  • Yunfu Zhu & Haoling Yang & Ma Zhong, 2023. "Do ESG Ratings of Chinese Firms Converge or Diverge? A Comparative Analysis Based on Multiple Domestic and International Ratings," Sustainability, MDPI, vol. 15(16), pages 1-17, August.
    • Handle: RePEc:gam:jsusta:v:15:y:2023:i:16:p:12573-:d:1220288
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    2. Cheng, Louis T.W. & Cheong, Tsun Se & Wojewodzki, Michal & Chui, David, 2025. "The effect of ESG divergence on the financial performance of Hong Kong-listed firms: An artificial neural network approach," Research in International Business and Finance, Elsevier, vol. 73(PA).
    3. Shu, Ying & Zhuang, Xiaobin & Xu, Guanghua & Zhang, Shanfei & Ying, Rui, 2024. "Peer effects, environmental regulation and environmental financial integration—Empirical evidence from listed companies in heavily polluting industries," Economic Analysis and Policy, Elsevier, vol. 82(C), pages 1446-1458.
    4. Danni Yu & Tiantian Meng & Minyu Zheng & Rongyi Ma, 2024. "ESG uncertainty, investor attention and stock price crash risk in China: evidence from PVAR model analysis," Palgrave Communications, Palgrave Macmillan, vol. 11(1), pages 1-13, December.
    5. Chenhui Lu & Caitian Wu & Linjie Feng & Jinghui Zhan & Yi Shi & Huangxin Chen, 2025. "Does ESG Performance Enhance Corporate Green Technological Innovation? Micro Evidence from Chinese-Listed Companies," Sustainability, MDPI, vol. 17(2), pages 1-25, January.

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