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Consolidation of the ESG Rating Industry as an Enactment of Institutional Retrogression

Author

Listed:
  • Emma Avetisyan

    (Audencia Business School)

  • Kai Hockerts

    (CBS - Copenhagen Business School [Copenhagen])

Abstract

Since the late 1980s, a plethora of Environmental, Social and Governance (ESG) rating agencies have sprung up, developing new rating methodologies to meet the (new) needs of concerned investors and to help companies to improve their CSR performance. Since 2005, the industry of ESG ratings has witnessed an important number of both national and cross-border consolidations. Based on a set of 37 interviews and secondary data, the paper reveals growth strategies of ESG rating agencies and explores the driving forces and impacts behind this wave of consolidation. Our focus is on four ESG rating agencies based in the United States, the United Kingdom, France and Switzerland. We have found financial motivation to be the main driver of consolidation. Additionally, and according to the perceptions of the ESG experts interviewed, a decrease in employee motivation coupled with a decrease in the quality of ESG research was observed to be one of the negative impacts of consolidation.

Suggested Citation

  • Emma Avetisyan & Kai Hockerts, 2017. "Consolidation of the ESG Rating Industry as an Enactment of Institutional Retrogression," Post-Print hal-01695693, HAL.
    • Handle: RePEc:hal:journl:hal-01695693
    DOI: 10.1002/bse.1919
    Note: View the original document on HAL open archive server: https://audencia.hal.science/hal-01695693
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    Keywords

    ESG rating agencies; growth strategies; industry consolidation; socially; responsible investing; 2;
    All these keywords.

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