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Top ESG Rating Agencies

ESG Rating Agencies

ESG rating agencies are companies that evaluate how businesses perform in three key areas: Environmental, Social, and Governance (ESG). ESG has evolved from a trendy term to an essential part of business and banking strategies. Financial institutions play a crucial role in promoting sustainability, so they need to focus on ESG investments. ESG ratings are important because they offer an easy way to compare companies on these issues.

In this post, we will explore the top ESG rating agencies in 2024 and explain how to use their ratings.

Top ESG Rating Agencies in 2024

MSCI and Sustainalytics are the top ESG rating providers due to their broad coverage. Bloomberg, Refinitiv, Moody’s, S&P, and Fitch also offer ESG ratings.

  1. MSCI ESG Ratings: Covers over 14,000 equity and fixed income issuers globally.
  2. Sustainalytics’ ESG Risk Ratings: Provides data on 40,000 companies and ratings on 20,000 companies and 172 countries.
  3. Bloomberg ESG Disclosure Scores: Offers ESG data for over 11,800 companies across 100+ countries.
  4. FTSE Russell’s ESG Ratings: Includes 7,200 securities in 47 markets.
  5. ISS Ratings and Rankings: Covers various sustainable investment issues.
  6. CDP Climate, Water, and Forest Scores: Rates nearly 20,000 funds on climate, water, and deforestation management.
  7. S&P Global ESG Score: Assesses over 7,300 companies using extensive data points.
  8. Moody’s ESG Solutions Group: Provides ESG scores, analytics, and sustainability services, including through V.E and Four Twenty Seven.

How to Use ESG Ratings in Your Investment Decisions

When making investment decisions, it is important to use various data sources. This is important for ESG investing too. Key sources of ESG information include corporate ESG ratings, direct contact with companies, corporate sustainability reports, and in-house research. You can also explore ESG index providers and online ESG tools, some of which are free.

Break down the ratings into environmental (E), social (S), and governance (G) factors, and even sub-categories. This detailed analysis can reveal more about companies’ sustainability strategies, practices, and programs, and help you see how they compare within their sector.

FAQs

Who is the best ESG rating provider?

MSCI ESG Research is one of the top ESG research providers.

What are the most used ESG ratings?

Popular ESG ratings include CDP, MSCI, Sustainalytics, Refinitiv, S&P Global, and ISS ESG.

Who calculates ESG ratings?

Investment companies, financial institutions, and specialized ESG research firms calculate ESG scores.