ESG Ratings: The Road Ahead

52 Pages Posted: 30 Nov 2020

See all articles by Claude Lopez

Claude Lopez

Milken Institute

Oscar Contreras

Milken Institute

Joseph Bendix

Milken Institute

Date Written: October 6, 2020

Abstract

In this report, we show that a standard set of variables would partially resolve inconsistencies and lack of uniform standards among rating providers, which often confuses investors. Furthermore, we dissociate the impact of the rating agencies’ different focus on E, S, or G from that of using non-standardized data. While the former, if properly disclosed, can be useful as it allows investors to choose what rating will align more with their preferences, the latter necessarily requires harmonization of the data.

Keywords: ESG ratings, Machine learning, Environmental, Social governance

JEL Classification: C14, C5, G10, G11, G14, G30

Suggested Citation

Lopez, Claude and Contreras, Oscar and Bendix, Joseph, ESG Ratings: The Road Ahead (October 6, 2020). Available at SSRN: https://ssrn.com/abstract=3706440 or http://dx.doi.org/10.2139/ssrn.3706440

Claude Lopez (Contact Author)

Milken Institute ( email )

1250 Fourth Street
Santa Monica, CA 90401
United States

HOME PAGE: http://claudelopez.com

Oscar Contreras

Milken Institute ( email )

1250 Fourth Street
Santa Monica, CA 90401
United States

Joseph Bendix

Milken Institute

1250 Fourth Street
Santa Monica, CA 90401
United States

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