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Contribution Details

Type Journal Article
Scope Discipline-based scholarship
Title Aggregate Confusion: The Divergence of ESG Ratings
Organization Unit
  • Florian Berger
  • Julian Kölbel
  • Roberto Rigobon
Item Subtype Original Work
Refereed Yes
Status Published in final form
  • English
Journal Title Review of Finance
Publisher Oxford University Press
Geographical Reach international
ISSN 1572-3097
Volume 26
Number 6
Page Range 1315 - 1344
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: 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.
Free access at DOI
Official URL
Digital Object Identifier 10.1093/rof/rfac033
Other Identification Number merlin-id:18058
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