What an “ESG rating” is (and what it’s not)

ESG Rating Explained YouTube Thumbnail

Here’s a note from Dustyn Lanz:

Okay, this needs to be said: An ESG rating represents the views of ONE data provider. These ratings DO NOT represent “ESG” as a whole, and they do not represent the views of sustainable or responsible investors.

ESG ratings are NOT taken at face value by institutional investors. They are one data point among many that serve as a starting point in a broader & deeper ESG analysis.

ESG ratings DO NOT measure a company’s moral compass or its positive impacts on the world. They usually measure a company’s exposure to ESG risks. (Although, I’m guessing many would say it’s time to start measuring impacts & outcomes on the world, in addition to the risks).

Do you think #ESG ratings providers should start measuring companies’ impacts & positive outcomes? Let me know your thoughts in the comments. (Let’s keep it respectful & constructive!)