An analysis of ESG ratings about their informative value, their validity, and their future significance using the example of the European Union

Abstract

Redefining CSR beyond its value to shareholders has created a new field of research. Many investors desire to invest the asset sustainably, meaning to consider ESG aspects. The increas ing number of investors interested in SRI has led to the parallel development of a market for specialized sustainability perspective ESG ratings. Many investors are dissatisfied with the cur rent situation and overwhelmed to make an informed choice, given the large variety of ratings. This can be explained by the fact that the definition of appropriate criteria that allow a statement about the sustainability of a company and the techniques used by rating agencies to measure these criteria need to be standardized. Using the EU as an example, this research aims to answer what informative value ESG ratings have, and the given informative value can be ensured through data validation. Eight financial or consulting institutions experts were interviewed as part of a qualitative research project. Findings show that practical assistance for investors re quires an analysis based on individual decision-making priorities. Investors must be more pur poseful in their approach to make an appropriate choice. Previous legislation, such as the EU taxonomy, set a basic framework for a uniform SRI approach, but only for the EU area. All market participants must adapt their strategies to achieve the Net Zero 2050 target.

Date of Award	24 Jan 2023
Original language	English
Awarding Institution	Universidade Católica Portuguesa
Supervisor	Nuno Moreira da Cruz (Supervisor)