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Measurement concerns and agreement of environmental social governance ratings

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  • Luluk Widyawati

Abstract

Measurement quality of environmental, social, and governance (ESG) rating is important, considering the increasing interest in socially responsible investment. This paper examines the measurement quality of four ESG ratings. Comprehensive analysis of the ratings, including its dimensionality, reliability, and validity suggests that they have significantly different measurement construct and measurement concerns, despite some commonalities. This study also presents a novel approach to examine the convergence of ESG ratings by assessing the level of agreement. The results of interrater reliability analysis suggest that while the agreement between ESG scores is low, there is evidence of a low to moderate agreement of ESG rankings.

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  • Luluk Widyawati, 2021. "Measurement concerns and agreement of environmental social governance ratings," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 61(S1), pages 1589-1623, April.
    • Handle: RePEc:bla:acctfi:v:61:y:2021:i:s1:p:1589-1623
    DOI: 10.1111/acfi.12638
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    References listed on IDEAS

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    3. Tan, Ruipeng & Pan, Lulu, 2023. "ESG rating disagreement, external attention and stock return: Evidence from China," Economics Letters, Elsevier, vol. 231(C).
    4. Wang, Haijun & Jiao, Shuaipeng & Ge, Chen & Sun, Guanglin, 2024. "Corporate ESG rating divergence and excess stock returns," Energy Economics, Elsevier, vol. 129(C).
    5. Céline LOUCHE & Guillaume DELAUTRE & Gabriela BALVEDI PIMENTEL, 2023. "Assessing companies' decent work practices: An analysis of ESG rating methodologies," International Labour Review, International Labour Organization, vol. 162(1), pages 69-97, March.
    6. Xiaoyan Xu & Hong Zhao, 2024. "An Empirical Study on ESG Evaluation of Chinese Energy Enterprises Based on High-Quality Development Goals—A Case Study of Listed Company Data," Sustainability, MDPI, vol. 16(15), pages 1-22, August.
    7. Caterina Lucarelli & Sabrina Severini, 2024. "Anatomy of the chimera: Environmental, Social, and Governance ratings beyond the myth," Business Strategy and the Environment, Wiley Blackwell, vol. 33(5), pages 4198-4217, July.

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