Listed companies can no longer just maximize profits, but must ensure that their operations are sustainable and accountable for their environmental, societal and governance (ESG) practices. Agencies such as Moody's or S&P rate companies on their ESG practices, each with its own approach (Berg et al., 2022). This diversity is not harmful in itself. The criticisms come from the lack of transparency in the methodologies, biases, and assumptions that underlie the scores. To overcome market opacity and justify their ESG commitment, responsible investors develop proprietary analysis frameworks that match their investment style, beliefs and customers. The result, beyond the discrepancy in agency ratings, is a diversity of investor opinions.
Aligning Values and Valuation for a responsible financial system. ValueCo captures the market value of sustainability.
