Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/284398 
Year of Publication: 
2024
Series/Report no.: 
SAFE Working Paper No. 415
Publisher: 
Leibniz Institute for Financial Research SAFE, Frankfurt a. M.
Abstract: 
In this study, we unpack the ESG ratings of four prominent agencies in Europe and find that (i) each single E, S, G pillar explains the overall ESG score differently, (ii) there is a low co-movement between the three E, S, G pillars and (iii) there are specific ESG Key Performance Indicators (KPIs) that are driving these ratings more than others. We argue that such discrepancies might mislead firms about their actual ESG status, potentially leading to cherry-picking areas for improvement, thus raising questions about the accuracy and effectiveness of ESG evaluations in both explaining sustainability and driving capital toward sustainable companies.
Subjects: 
ESG Investing
ESG ratings
Asset Allocation
Portfolio Management
Sustainable Finance
JEL: 
M14
G24
G11
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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