"CMIA helped to explain the potential for project-based mechanisms across a variety of constituencies and is a key voice driving the conversation on results-based finance and sector approaches for scaling-up emission reduction investments. We urgently need input from organisations like CMIA to operationalise Art 6 of the Paris Agreement."

Mr. Franz-Josef Schafhausen, former Director General Climate Change, European and International Affairs, Federal German Ministry of the Environment, Nature Conservation, Building and Nuclear Safety

Rewriting History II: The (Un)Predictable Past of ESG Ratings

30th December 2020 by CMIA

The explosion in ESG research has led to a strong reliance on ESG rating providers.

Abstract

The explosion in ESG research has led to a strong reliance on ESG rating providers. We document widespread changes to the historical ratings of Refinitiv ESG, formerly ASSET4, a key rating provider. Across two downloads in 2018 and 2020, we document large rewritings in ESG ratings, which are systematic and partially related to firm characteristics.

The retrospective rating changes have important implications for researchers and investment professionals. Depending on whether the original or rewritten data are used, rankings and classifications of firms into ESG quantiles change. We demonstrate that these changes affect tests that relate ESG ratings to stock returns.

Download the full paper here: https://bit.ly/ESG_paper