Unpacking Environmental, Social, and Governance Score Disparity: A Study of Indonesian Palm Oil Companies

Round 1

Reviewer 1 Report

Comments and Suggestions for Authors

This is a very interesting topic and the author has selected 2 companies that ought to be concerned with ESG reporting. However the author is advocatingt that there ought to be global standards but we can not draw this conclusion from his study as he has looked at only 2 companies in the same industry in Indonesia.

 

In addition the author is arguing that there are different ESG agencies, I would say scoring and different methodologies but does not mention them in detail and how they differ and how does this relate to the 2 companies he has selected?

Furthermore, the author does not mention if he has had any financial support or link with any of the companies. To that context he should have explained why those 2 companies, how he accessed those reports, how is he mitigating for the fact that the information may not be verified/audited? Has he also checked the ESG performance as disclosure and performance are not the same.

Finally, I would suggest that the author states that this is a case study of Indonesian oil companies, can justify the sector and he needs to emphasise that he is looking at the E component. There has been alot of controversy on the S component of this sector in Indonesia too.

It is an interesting article but it needs to be revised

Comments for author File: Comments.pdf

Author Response

Dear Reviewer 1,

Enclosed please find our respond letter to capture all your comment and our feedback. I hope it informs you well. Thank you.

Kind regards,

Authors

Author Response File: Author Response.pdf

Reviewer 2 Report

Comments and Suggestions for Authors

This study sought to investigate the inconsistencies in ESG scores assigned by different rating agencies (SPOTT ESG scores and Sustainalytics ESG risk ratings). Specifically, it sought to examine the link between reported sustainability performance and the resulting ESG scores of two Indonesian palm oil companies.

Although the paper can be exciting and contribute to the literature, several issues must be addressed.

1. Rating bodies use different methodologies that influence the outcome. They must discuss these methodologies and show how their chosen metrics align with them. This will justify assessing consistency and discrepancy with their content analysis score or rating to that of the two rating bodies adopted.  

Additionally, they need to properly ground the chosen metrics in the literature and also in practice. What are the views of sustainability standards on the chosen metrics? GRI and IFRS sustainability standard. Thus, literature and the sustainability standards should at least show that the metrics are the main bases for assessing a firm's sustainability performance, or firms hinges their sustainability reports on these metrics or these are the bases ratings bodies scores sustainability performance of firms. in short, what are the basses for these metrics.

 

2. What are the discrepancies the paper alludes to? The paper clearly shows that on all counts, DSNG is rated better than TAPG by both raters which also aligns with their own qualitative content analysis assessment, although the metrics require justification. 

 

2. On the research question - Does reported sustainability performance in the reports of two Indonesian palm oil companies differ, and could such discrepancies explain inconsistencies observed in ESG scores assigned by separate rating agencies? (line 72 to 74), there is nothing to research on whether the reported sustainability performance of the two Indonesian palm oil companies will differ. As two separate firms, with different strategies and management focus, their performance will differently differ. Hence, we don't need research to answer that. The study is not on factors that may explain the differences in their performance, the study seems to be examining whether there will be performance differences. the answer to that is yes.

 

3. Investigating the relationship between reported sustainability practices and ESG scores allows us to explore the inconsistencies in the way companies engage with stakeholders, including ESG rating agencies, and how this might contribute to the observed disparity in ESG ratings (lines 127 to 130)

  How does this help in explore the inconsistencies in the way companies engage with stakeholders?

 

By analyzing how these practices are disclosed in the reports of Indonesian palm oil companies, the study can explore potential discrepancies in reported sustainability efforts. (lines 187 to 189) 

How will you achieve this if the methodology and the focus of each of the rating bodies significantly differ? Your methodology on this is also scanty and fails to provide how this will be achieved. In short, how will you establish the discrepancies?

 

4. Why 2022 and 2023?

Why only these two firms?

Why these two sustainability rating bodies?

 

 

 

Comments on the Quality of English Language

It was moderate, proof reading will help improve this. 

Author Response

Dear Reviewer 2,

Enclosed please find the respond letter to capture all your comment and our feedback. I hope it informs you well. Thank you.

Kind regards,

Authors

Author Response File: Author Response.pdf

Round 2

Reviewer 1 Report

Comments and Suggestions for Authors

Dear authors,

thank you for addressing most of the suggestions made. 

best wishes

 

 

 

Comments on the Quality of English Language

Dear Editor,

the authors have addressed most of the suggestions made. 

The paper can be published as is

Best wishes