ESG ratings: Bringing transparency or just greenwashing?

Quality of sustainability ratings brought into question

Pedro Gonçalves
clock • 5 min read
The inconsistency of ESG ratings criteria is of particular concern to managers
Image:

The inconsistency of ESG ratings criteria is of particular concern to managers

With sustainable investing proliferating rapidly and ESG ratings becoming embedded in financial markets, providers are coming under the spotlight over the transparency of their scoring systems.

ESG-themed investments saw strong performance and an influx of flows in 2020, and are expected to be a key driver of organic asset growth for managers in 2021. However, these heavy flows into ESG funds are raising questions over the quality and robustness of sustainability ratings. Apples and oranges A company score on ESG can vary immensely given the many different methodologies on the market. A false dawn or green revolution? Picking apart the UK Government's ten-point plan "ESG rating systems do not measure the same things: some ratings focus on the ESG risk exposure of com...

To continue reading this article...

Join Investment Week

  • Unlimited access to real-time news, analysis and opinion from the investment industry, including the Sustainable Hub covering fund news from the ESG space
  • Get ahead of regulatory and technological changes affecting fund management
  • Important and breaking news stories selected by the editors delivered straight to your inbox each day
  • Weekly members-only newsletter with exclusive opinion pieces from leading industry experts
  • Be the first to hear about our extensive events schedule and awards programmes

Join now

 

Already an Investment Week
member?

Login

More on ESG

Investors look away from energy intensive sectors such as chemicals, metals and manufacturing.

'An investor's worst nightmare': Energy rationing spells greater chaos for supply chains

Business confidence falls

clock 05 August 2022 • 5 min read
Lee Robinson, founder and CIO, Altana Weath
ESG

Carbon trading: the big long

Time for a different hedge

Lee Robinson
clock 05 August 2022 • 4 min read
25 out of 36 companies in Morningstar’s coverage have faced controversy over human rights abuses.
ESG

High ESG risk fashion industry continues to threaten investor capital

Luxury apparel faces counterfeit risk

clock 04 August 2022 • 2 min read
Trustpilot