Rating the ESG rating agencies – no wonder you’re feeling confused


  • Nils Håkan Werner, Senior Associate

Opinion Piece

Investments in environmental, social and governance (ESG) rose to USD 2.5 billion last year, according to Morningstar – a growth of 290% compared to 2018.

ESG rating agencies play a key role in determining appropriate investments for ESG funds, which has a significant impact on capital flows and the response to climate change. However, differing ratings from leading agencies are causing confusion.

A study shows that discrepancies are often due to different input data. For example, Credit Suisse received different ratings from S&P Global and MSCI. The solution lies in the standardization of ESG disclosure, not in the harmonization of valuation methods. Swiss banks are building ESG teams and should rely on standardized ESG data to promote transparency and trust in ESG ratings.

The EU SFDR Regulation and the CSRD Directive are steps towards standardization and increased transparency in ESG reporting. Banks can support meaningful change and increase trust in ESG ratings through comparable and transparent ESG data.

Learn more in our e-paper about the importance of standardized ESG data and how you can incorporate it into your business strategies to increase transparency and trust in ESG investments.

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