The Unreasonable Attractiveness of More ESG Data

20 Pages Posted: 8 Jul 2021 Last revised: 23 Jul 2021

See all articles by Mike Chen

Mike Chen

Panagora Asset Management

Rob von Behren

Google Research

George Mussalli

PanAgora Asset Management

Date Written: July 6, 2021


Sustainable investing is of tremendous interest in both academia and the investment industry. However, despite the interest and the surge of assets under management (AUM) inflow, ESG data currently remains a fundamental challenge as they are deficient in quantity, consistency, and quality. In light of this data challenge, many investors and academics have come to rely on commercial ESG raters to access the ESG quality of various corporations. However, the commercial ESG ratings still suffer some notable biases. This paper documents one possible bias, termed “quantity bias.” The authors found that the amount of ESG data that is available for a given company is positively correlated with the commercial ESG rating of that company, and also the weighted average cost of capital for that company. The implication for investors is that they should do their homework and examine what the ESG data actually say rather than simply “check the box.” For corporations, it implies that they will get favorable treatment in the capital market if they publish more ESG data.

Keywords: ESG, Sustainability, ESG Data, Bias, WACC, ESG Ratings

JEL Classification: C1, D9, G4

Suggested Citation

Chen, Mike and von Behren, Rob and Mussalli, George, The Unreasonable Attractiveness of More ESG Data (July 6, 2021). Available at SSRN: or

Mike Chen (Contact Author)

Panagora Asset Management ( email )

260 Franklin Street
Boston, MA 02110
United States
9173186197 (Phone)

Rob Von Behren

Google Research ( email )

United States

George Mussalli

PanAgora Asset Management ( email )

1 International Place
24th Floor
Boston, MA 02110
United States
617-439-6324 (Phone)


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