2. Theoretical Background
2.1. ESG Rating Agency Industry
2.2. Have ESG Rating Agencies Been Able to Integrate Sustainability Principles into Corporate Sustainability Assessment?
- Lack of transparency. ESG rating agencies do not offer complete and public information about the criteria and the assessment process developed by them to evaluate the corporate sustainability performance. This makes understanding what ESG rating agencies are measuring and making comparisons between them difficult [7,19,22,29].
- Commensurability. ESG rating agencies may measure the same concept in different ways. Therefore, if the assessments of ESG ratings are not consistent, which involves evidence of low commensurability, the hypothesized benefits of CSR cannot occur .
- Lack of an overall score. Most of the ESG rating agencies provide environmental, social and governance rates to each domain, but they do not provide an overall score of the corporate sustainability performance .
2.3. Sustainability Principles
- Sustainability dimensions and the balance among them. Sustainability is a multidimensional concept  where three domains can be distinguished: financial economic, environmental and social. Achieving a balance among the three domains implies not prioritizing or undermining a dimension over the other ones.
- Intergenerational perspective. This principle implies identifying, evaluating and managing the future and the current needs , considering the long-term effects of today’s decisions and a balance between both short- and long-term ones.
- Stakeholder approach. Sustainability involves identifying the current stakeholders’ needs and expectations and the future generations’ needs.
- Life-cycle thinking (LCT). Decision-makers should shoulder economic, environmental and social responsibilities in order to achieve sustainability which cross legal organizational boundaries. In this regard, sustainability involves managing the impacts of upstream and downstream activities and, accordingly, adopting an LCT approach.
- Pre-analysis: We established the objectives of the content analysis, and we selected the material for analysis. Concretely, we analyzed the qualitative and public information provided by the ESG rating agencies on their corporate websites concerning their corporate sustainability analysis criteria in 2008 (see Escrig-Olmedo et al. ) and 2018. We browsed the company website in order to seek information on the corporate sustainability assessment, sustainability and ESG data, ESG research and ratings until five clicks.
- Treatment and interpretation: We examined the relevance and the presence or absence of the themes in the content analyzed. We considered that a theme is relevant if it is public on the ESG rating agency website and, moreover, if it is highlighted as a key criterion in the assessment process of the ESG rating agency. Finally, we quantified the percentage of ESG rating agencies in the sample that offered information about specific assessment criteria.
- Sustainability dimensions and the balance among them. An ESG rating agency integrates this principle if in its assessment process and methodologies, environmental, social and governance criteria are equally important.
- The intergenerational perspective. An ESG rating agency integrates this principle if the criteria or assessment methodology aspects such as the future and the current needs or specific risks considering both the short and long term are explicitly laid down.
- Stakeholder approach. An ESG rating agency integrates this principle if stakeholders’ needs and expectations are integrated in its criteria and assessment process.
- Life-cycle thinking (LCT). An ESG rating agency applies this principle if the way the company impacts upstream and downstream activities, in accordance with the adoption of a LCT approach, are examined in its criteria and assessment frameworks.
5. Discussion and Conclusions
Conflicts of Interest
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|ESG Rating Agencies and Information Provider Agencies 1|
(2008) → (2018)
|Number of Companies Analyzed by ESG Rating Agencies||Other Important Facts|
|Around 22,000 companies |
Around 4000 companies
Around 4100 companies
Around 7000 companies
Around 20,000 companies
Around 4500 companies
Around 9000 companies
Around 4000 companies
|Companies across 87 countries|
Companies across 47 developed and emerging markets
It is used by 46 of the top 50 asset managers and by 1200 investors worldwide.
2000 institutional clients, 115 markets covered.
Companies across 60 countries
Expanded to 11,000 companies in Q2 2019.
A multicultural team of 145 analysts
|ESG Rating Agencies||(1) Sustainability Dimensions 1||(2) Balance||(3) Intergenerational Perspective||(4) Stakeholder Approach||(5) Life-Cycle Thinking|
|FTSE Russell ESG Ratings||EN|
|MSCI ESG Research||EC|
|ESG rating agencies||EC|
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