Rewriting History II: The (Un)Predictable Past of ESG Ratings

By Florian Berg, Kornelia Fabisik, Zacharias Sautner. 2020

181 citations recorded by the source corpus.

The explosion in ESG research has lead to a strong reliance on ESG rating providers. We document widespread changes to the historical ratings of Refinitiv ESG, formerly ASSET4, a key rating provider. Across two downloads in 2018 and 2020, we document large rewritings in ESG ratings, which are systematic and partially related to firm characteristics. The retrospective rating changes have important implications for researchers and investment professionals. Depending on whether the original or rewritten data are used, rankings and classifications of firms into ESG quintiles change. We demonstrate that these changes affect tests that relate ESG ratings to stock returns.

Subfields: Economics and Econometrics

View Paper: https://www.semanticscholar.org/paper/45d245a26bc81ec0b028b3e05c83e1bf784be04c

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In Economics and Econometrics

1. Joerg-Markus Hitz
2. P. Fiechter
3. Alper Darendeli
4. Pilar Velasco
5. G. D. L. Fuente
6. Margarita Ortiz

Citations in the corpus

• The value of a firm’s engagement in ESG practices: Are we looking at the right side? (2021, methodology): “As Berg et al. (2020) note, these ESG ratings measure a firm’s ESG quality by quantifying how well a firm performs according to ESG criteria.”
• The Role of Corporate Social Responsibility (CSR) Information in Supply-Chain Contracting: Evidence from the Expansion of CSR Rating Coverage (2021, background): “For instance, Berg et al. (2020) and Diebecker et al. (2019) document rating disagreement among different data vendors.”