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Disagreement among ESG rating agencies: shall we be worried?

Author

Listed:
  • Lopez, Claude
  • Contreras, Oscar
  • Bendix, Joseph

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.

Suggested Citation

  • Lopez, Claude & Contreras, Oscar & Bendix, Joseph, 2020. "Disagreement among ESG rating agencies: shall we be worried?," MPRA Paper 103027, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:103027
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    References listed on IDEAS

    as
    1. Gunnar Friede & Timo Busch & Alexander Bassen, 2015. "ESG and financial performance: aggregated evidence from more than 2000 empirical studies," Journal of Sustainable Finance & Investment, Taylor & Francis Journals, vol. 5(4), pages 210-233, October.
    2. Rajna Gibson Brandon & Philipp Krueger & Peter Steffen Schmidt, 2021. "ESG Rating Disagreement and Stock Returns," Financial Analysts Journal, Taylor & Francis Journals, vol. 77(4), pages 104-127, October.
    3. Tim Verheyden & Robert G. Eccles & Andreas Feiner, 2016. "ESG for All? The Impact of ESG Screening on Return, Risk, and Diversification," Journal of Applied Corporate Finance, Morgan Stanley, vol. 28(2), pages 47-55, June.
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    Cited by:

    1. Kangqi Jiang & Jie Zhang & Mengling Zhou & Zhongfei Chen, 2025. "ESG disagreement and corporate debt maturity: evidence from China," Financial Innovation, Springer;Southwestern University of Finance and Economics, vol. 11(1), pages 1-39, December.
    2. Gregor Dorfleitner & Rongxin Zhang, 2024. "ESG News Sentiment and Stock Price Reactions: A Comprehensive Investigation via BERT," Schmalenbach Journal of Business Research, Springer, vol. 76(2), pages 197-244, June.

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    Keywords

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    JEL classification:

    • C14 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Semiparametric and Nonparametric Methods: General
    • C5 - Mathematical and Quantitative Methods - - Econometric Modeling
    • G10 - Financial Economics - - General Financial Markets - - - General (includes Measurement and Data)
    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions
    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
    • G30 - Financial Economics - - Corporate Finance and Governance - - - General

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