Comparative analysis of the social component when assigning an ESG rating

Abstract

Every year, Russian companies are using ESG (environmental, social, governance) ratings more actively as a tool to increase their investment attractiveness. At the same time, there are no clear standards in the world and domestic practice that should be considered when forming these ratings. In this regard, the ESG methodologies presented on the Russian market are based on extremely subjective criteria and approaches to their assessment. This can lead to dramatically different results of the ESG ratings from different analytical agencies. In order to verify this fact, the authors of the article have conducted a study the essence of which is to calculate and further compare the S-criterion based on the methodologies of several large Russian analytical agencies providing ESG assessment services. This approach has allowed us to assess in practice the degree of differences that underlie the formation of the ESG methodologies. The result of the work is that the results of the S-components of the domestic ESG agencies are highly similar, which has not confirmed the hypothesis made by the authors. Despite the fact that each of the ESG methodologies ha included different, often dissimilar indicators, the result of the study has revealed their remarkable efficiency and consistency with each other. Contrary to the concerns of regulators and researchers, the results of the agency ratings show a high degree of mutual similarity. Further research should be aimed at evaluating the E and G components of the ESG ratings of the Russian analytical agencies, and at summarising the findings obtained for the final refutation or acceptance of the made hypothesis.

Keywords

• sustainable development
• ecological component
• social responsibility
• corporate governance
• esg rating
• electricity transmission
• expert assessments