# Aggregate Confusion: The Divergence of ESG Ratings

“Aggregate Confusion: The Divergence of ESG Ratings” (2022), by Florian Berg et al. Business and Management research paper. Original abstract below, unchanged. No free PDF was found.

- Authors: Florian Berg, Julian F Kölbel, Roberto Rigobón
- Published: May 23, 2022
- Field: Business and Management
- DOI: https://doi.org/10.1093/rof/rfac033
- Source: https://doi.org/10.1093/rof/rfac033

## Abstract

This paper investigates the divergence of environmental, social, and governance (ESG) ratings based on data from six prominent ESG rating agencies: Kinder, Lydenberg, and Domini (KLD), Sustainalytics, Moody’s ESG (Vigeo-Eiris), S&P Global (RobecoSAM), Refinitiv (Asset4), and MSCI. We document the rating divergence and map the different methodologies onto a common taxonomy of categories. Using this taxonomy, we decompose the divergence into contributions of scope, measurement, and weight. Measurement contributes 56% of the divergence, scope 38%, and weight 6%. Further analyzing the reasons for measurement divergence, we detect a rater effect where a rater’s overall view of a firm influences the measurement of specific categories. The results call for greater attention to how the data underlying ESG ratings are generated.

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