Assessment of an entity's environmental, social and governance performance by a specialised agency, marked by low correlation across providers.
An ESG rating is an assessment of the environmental, social and governance performance of a company or issuer, produced by specialised agencies such as MSCI, Sustainalytics or ISS. It aggregates a multitude of indicators into a synthetic score intended to guide investment and underwriting decisions. The most documented structural flaw of these ratings is their low correlation: two agencies can assign divergent scores to the same company, unlike credit ratings which converge strongly. This divergence stems from differences in scope, weighting and measurement, and undermines the use of scores as an unambiguous signal. For the financial sector, the heterogeneous reliability of ESG ratings complicates the application of exclusion policies and exposes to greenwashing risk when a favourable score masks a contestable reality. The European regulator is working to frame the activity of ESG rating providers.
A company rated favourably by one agency and unfavourably by another illustrates the divergence problem that undermines the comparability of ESG scores.
ESG rating, score ESG, agences de notation extra-financière