ESG rating agencies vary in the approach they take to rate companies. They all vary in measurements, metrics and analyses. This causes frustration for both companies and investors. For instance, MIT did great research in this space in a recent paper published in 2020. This paper essentially recommends that instead of focusing on a particular rating agency, companies should rather focus on a high level market consensus-based approach to ESG and sustainability. The paper concludes that rating agencies do not play as important a role as initially though in guiding companies towards ESG improvement. At Eunoic, we take a rater-neutral approach to ESG that does not focus on individual rating agencies, but rather look at them in combination. This article gives more insight into why it is better to focus rather on a host of rating agencies rather than a singular one.

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