Standardisation needed to tackle divergent ESG ratings
There is significant divergence in the environmental, social and governance (ESG) ratings provided to companies by different agencies, according to a study in the Review of Finance. The authors suggest that this divergence could have real-world impacts on investment decisions and transition to a more sustainable economy. Such evidence strengthens the case for greater harmonisation in ESG disclosures and data standards – a case that has recently been made by the French financial markets regulator the Autorité des marchés financiers (AMF), amongst others. In response to the European Commission’s consultation, it has called for a comprehensive European regulatory framework for providers of ESG data, ratings and related services.