THE DIVERGENCE OF ESG RATINGS: AN ANALYSIS OF ITALIAN LISTED COMPANIES

Vincenzo Capizzi (), Eleonora Gioia (), Giancarlo Giudici () and Francesca Tenca
Additional contact information
Eleonora Gioia: School of Management, Politecnico di Milano, Via Lambruschini 4, 20156 Milano, Italy
Giancarlo Giudici: School of Management, Politecnico di Milano, Via Lambruschini 4, 20156 Milano, Italy
Francesca Tenca: School of Management, Politecnico di Milano, Via Lambruschini 4, 20156 Milano, Italy

Journal of Financial Management, Markets and Institutions (JFMMI), 2021, vol. 09, issue 02, 1-21

Abstract: The increasing attention to sustainability issues in finance has brought a proliferation of environmental, social, and governance (ESG) metrics and rating providers that results in divergences among the ESG ratings. Based on a sample of Italian listed firms, this paper investigates these divergences through a framework that decomposes ESG ratings into a value and a weight component at the pillar (i.e. E, S, and G) and category (i.e. sub-pillar) levels. We find that weights divergence and social and governance indicators are the main drivers of rating divergences. The research contributes to develop a new tool for analyzing ESG divergences and provides a number of recommendations for researchers and practitioners, stressing the need to understand what is really measured by the ESG rating agencies and the need for standardization and transparency of ESG measurement to favor a more homogeneous set of indicators.

Keywords: Environmental social governance; rating; divergence; ESG performance (search for similar items in EconPapers)
Date: 2021
References: Add references at CitEc
Citations: View citations in EconPapers (11)

Downloads: (external link)
http://www.worldscientific.com/doi/abs/10.1142/S2282717X21500067
Open Access

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:wsi:jfmmix:v:09:y:2021:i:02:n:s2282717x21500067

Ordering information: This journal article can be ordered from

DOI: 10.1142/S2282717X21500067

Access Statistics for this article

Journal of Financial Management, Markets and Institutions (JFMMI) is currently edited by Santiago Carbo-Valverde

More articles in Journal of Financial Management, Markets and Institutions (JFMMI) from World Scientific Publishing Co. Pte. Ltd.
Bibliographic data for series maintained by Tai Tone Lim ().