The ESG ratings landscape

The report highlights that investors are using ESG ratings and data when making investment decisions, even as they struggle to make sense of raters’ data. Investors use ESG rating products multiple times per week, which indicates their prominence in the sustainable investing ecosystem.

Investor and corporate surveys

The research emphasizes that investors are the primary customers for ESG ratings products and drivers of their evolution. Corporate familiarity with ESG raters is variable. Investors motivate corporate ESG ratings participation.

The evolution of investor and corporate perceptions of ESG ratings

Surveyed investors rated their overall trust level in ESG ratings providers as 3.31 out of 5. Corporate participants rated their level of trust at 2.91 out of 5. The report emphasises the importance of transparency by offering access to the full methodology behind ESG ratings. It also suggests that ESG raters must improve their responsiveness to corporate complaints and questions.

Pain points and evolutionary paths

The report identifies several evolutionary paths for the ESG ratings industry. It highlights trends such as expanding into private markets, increased regulatory pressure, and global expansion.

Recommendations and conclusion

The report concludes that ESG rating providers are essential to the sustainable investing ecosystem. The report recommends several actions for ESG ratings providers, including increasing transparency, simplifying participation, improving quality, and supporting interoperability. The report suggests that investors should prioritise ESG ratings based on how frequently investors and other stakeholders use them and conduct ESG rating reviews and peer analyses to improve ratings performance.