ESG Rating—Necessity for the Investor or the Company?
| Autor: | Nataļja Lāce, Ilze Zumente |
|---|---|
| Rok vydání: | 2021 |
| Předmět: |
Environmental effects of industries and plants
Divergence (linguistics) Renewable Energy Sustainability and the Environment Financial economics Corporate governance Geography Planning and Development TJ807-830 Management Monitoring Policy and Law TD194-195 social and governance (ESG) ESG ratings Renewable energy sources environmental Environmental sciences Stock exchange Sustainability GE1-350 Business CEE Stock (geology) |
| Zdroj: | Sustainability Volume 13 Issue 16 Sustainability, Vol 13, Iss 8940, p 8940 (2021) |
| ISSN: | 2071-1050 |
| DOI: | 10.3390/su13168940 |
| Popis: | With the rise of responsible investments, the demand for non-financial data has multiplied. Even for those companies who have obtained an environmental, social and governance (ESG) assessment, the scores issued by rating agencies tend to depict differing pictures of the sustainability performance. First, this article explores the approaches employed by different ESG rating providers. Next, it aims to evaluate the availability and correlation of multiple third-party ratings awarded to companies that are stock-listed on European stock exchanges. Finally, an independent t-test analysis is performed to explore whether the lack of ESG rating availability in the region of Central and Eastern Europe (CEE) has a negative impact on stock’s trading volume and returns. The results suggest substantial divergence in the ratings awarded to the European companies therefore, companies should pay attention to the methodologies and practices applied by differing agencies to make sure that their efforts are appropriately evaluated, while investors should bear in mind the correlation coefficient of only 0.58 between the two most popular ESG ratings. The analysis on CEE companies shows significant differences in the trading volume between companies that have been awarded an ESG rating and those that have not, implying the importance of the ESG score not only for the investors but also for the companies. |
| Databáze: | OpenAIRE |
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