Understanding ESG ratings and ESG indexes

Pagano, Michael S.; Sinclair, Graham; Yang, Tina

doi:10.4337/9781786432636.00027

Cited by 43 publications

(44 citation statements)

References 0 publications

Supporting

Mentioning

Contrasting

Unclassified

Order By: Relevance

“…Considering the ESG scores provided by various rating agencies, Thomson Reuters ESG Scores are a widely accepted measure of ESG performances amongst industries (Pagano, Sinclair, & Yang, ). These ESG ratings are available for over 7,000 companies globally represented as time series data on ESG performances of the firms on 10 major themes with history going back to 2002 (Thomson Reuters ESG Scores, ).…”

Section: Introductionmentioning

confidence: 99%

See 1 more Smart Citation

Relating Environmental, Social, and Governance scores and sustainability performances of firms: An empirical analysis

2019

View full text Add to dashboard Cite

Environmental, Social, and Governance (ESG) scores can act as an indicator for sustainability performance of organizations. This paper explores an empirical evidence for the relationship binding ESG scores and sustainability performances of firms. We observe and evaluate the ESG performance scores of 1,820 firms globally for 5 years, from 2014 to 2018 on 10 major themes and over 400 different indicators, as listed by Thomson Reuters and is captured from the Bloomberg terminal data. We posit five hypotheses to check the relations binding ESG scores and the total sustainability performances of firms. A Partial Least Square (PLS) analysis and standard bootstrapping using Smart PLS 3.0 software is used to observe the results and to evidence the direct and moderating effects among latent variables contributing to sustainability performances. We observe a significant and negative moderating effect of ESG performances, independently over the all direct relations, considering their relationship to ESG performances. One of the major implications of this research is in the direction of assigning priorities while considering environmental‐, social‐, and governance‐related themes in the implementation of any strategies or policies into practice.

show abstract

Section: Introductionmentioning

confidence: 99%

mentioning

confidence: 99%

Relating Environmental, Social, and Governance scores and sustainability performances of firms: An empirical analysis

2019

View full text Add to dashboard Cite

show abstract

“…SRI indices have been widely used in the CSP-CFP literature as proxies for CSP [3], assuming that companies listed in an SRI index have a good CSP and that companies not included have a poor CSP; however, it has been criticised for the rather obscure methodologies behind the indices' configuration and management, and the potential existence of other factors apart from CSP influencing inclusions in and exclusions from the indices [8][9][10]. Once again, studies offer inconclusive results, from no effect on CFP to both positive and negative relations.…”

Section: Sri Indicesmentioning

confidence: 99%

“…There are many sustainability, CSR or ESG-related stock indices, based on different investment universes regarding their geographical scope and their relation to general or specific ESG topics [9]. The United States equity market is of particular interest when analysing investment strategies and results, given its strong efficiency and well-established institutional dynamics, and considering that it is a reference market worldwide and a barometer of the US economy in particular, and of the whole world economy generally [97,98].…”

Section: Selection Of An Sri Indexmentioning

confidence: 99%

“…This assertion is far from universally accepted and the role of rating agencies behind SRI indices has been criticised. The processes and methods for the assessment of the sustainability commitment and performance of companies, do not clearly specify the reasons behind the high or low sustainability scores of a company, and the diversity of ratings and methodologies only adds to the confusion and distrust [8,9]. Furthermore, inclusions in SRI indices have been associated with factors other than CSP [10].…”

mentioning

confidence: 99%

See 1 more Smart Citation

Inclusions in and Exclusions from the S&P 500 Environmental and Socially Responsible Index: A Fuzzy-Set Qualitative Comparative Analysis

2019

View full text Add to dashboard Cite

Socially responsible investment (SRI) indices provide an interesting opportunity to analyse the links between corporate financial performance (CFP) and corporate sustainability performance (CSP). However, few studies focus on the antecedents of inclusions in and exclusions from SRI indices. Specifically, the implications of corporate sustainability disclosure (CSD) have been largely ignored in this field. Furthermore, previous literature on the CSP-CSD-CFP links shows inconclusive results that have been attributed to both methodological and measurement problems, which suggest the existence of asymmetry, equifinality and complexity amongst these links. This study targets two under-researched areas regarding the determinants of changes in the composition of SRI indices, and the effects of CSD on CSP. This study also attempts to overcome the methodological and measurement limitations of previous studies on the CFP-CSD-CSP links. The study presents a fuzzy-set qualitative comparative analysis (fsQCA) to explore how different combinations of CFP and CSD indicators are related to inclusions in an SRI index (assumed as expressions of a good CSP), and exclusions from an SRI index (equivalent to a poor CSP). The empirical results reveal that a combination of different CSD indicators is necessary, but not sufficient, to lead to the inclusion in or exclusion from an SRI index, and that CFP measures have asymmetrical effects on CSP. CSD is a relevant antecedent or precondition of CSP that can motivate changes in corporate behaviours towards an improved CSP. Poor CSP, leading to an exclusion from the index, is associated with poor CSD and a deterioration of CFP. The implications for researchers, business managers, SRI rating agencies and policymakers are derived.

show abstract

Why don't asset managers accelerate ESG investing? A sentiment analysis based on 13,000 messages from finance professionals

Zeidan

2022

Bus Strat Env

View full text Add to dashboard Cite

Mitigating climate change effects requires investors (and their proxies, fund managers) to shift their business‐as‐usual strategies. This article analyzes Environmental, Social, and Governance (ESG) investing behavior through more than 13,000 messages exchanged by finance professionals from 2017 to 2020. There is a consensus that low and high ESG firms' discrimination is a necessary but not sufficient condition for ESG investing. Moreover, it is one thing for fund managers to claim that they are integrating ESG factors in their portfolios and another to do it properly. The restriction of the strategy space, internal and external transaction costs, and data quality are still viewed as overwhelming obstacles for seamlessly integrating ESG into financial portfolios. Sentiment analysis indicates that asset managers hold a negative view of ESG investing, surprising as ethical investing is becoming increasingly common. Unlocking the potential positive externalities from ESG investing may require regulators and investors' actions to improve the quality of information disclosure and pressure fund managers into incorporating nonfinancial criteria in their investment models.

show abstract

Understanding ESG ratings and ESG indexes

Cited by 43 publications

References 0 publications

Relating Environmental, Social, and Governance scores and sustainability performances of firms: An empirical analysis

Relating Environmental, Social, and Governance scores and sustainability performances of firms: An empirical analysis

Inclusions in and Exclusions from the S&P 500 Environmental and Socially Responsible Index: A Fuzzy-Set Qualitative Comparative Analysis

Why don't asset managers accelerate ESG investing? A sentiment analysis based on 13,000 messages from finance professionals

Contact Info

Product

Resources

About