Cross-dispersion bias-adjusted ESG rankings

Philippe Dupuy and Jean-Charles Garibal ()
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Philippe Dupuy: Grenoble Ecole de Management
Jean-Charles Garibal: Grenoble Ecole de Management

Journal of Asset Management, 2022, vol. 23, issue 7, No 7, 643 pages

Abstract: Abstract We study the formation of ESG scores and rankings. In particular, we investigate the impact of aggregation rules when combining information on firms across categories, notably the E, S and G categories, into single ESG scores. Usual aggregation rules may bias scores toward the smost dispersed category. We suggest a correction for this dispersion bias. We apply this correction to scores provided by two of the main score providers: Refinitiv and Bloomberg. We also provide simulation evidences. We show that the cross-dispersion bias may have a significant impact on ESG scores formation and that our proposed adjustment tends to weather it.

Keywords: ESG; Sustainability; Corporate social responsibility; Cross-dispersion bias; Scoring; Adjusted scores (search for similar items in EconPapers)
JEL-codes: C40 C53 C58 G00 G11 (search for similar items in EconPapers)
Date: 2022
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DOI: 10.1057/s41260-022-00293-x

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