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Contribution Details

Type Journal Article
Scope Discipline-based scholarship
Title Aggregate Confusion: The Divergence of ESG Ratings
Organization Unit
  • Contribution from another University/Organization than University of Zurich
  • Florian Berg
  • Julian Kölbel
  • Roberto Rigobon
Item Subtype Original Work
Refereed Yes
Status Published electronically before print/final form (Epub ahead of print)
Journal Title Review of Finance
Publisher Oxford University Press
Geographical Reach national
Volume forthcoming
Page Range -
Date 2022
Abstract Text This paper investigates the divergence of environmental, social, and governance (ESG) ratings based on data from six prominent ESG rating agencies: 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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