In focus

Data, not drama

A lot of energy has been put into “proving” the investment value of ESG ratings assigned to companies. In our opinion, that energy has been misplaced.

There is a wide and growing range of ESG rating methodologies, each assessing companies in different ways and, often, coming to very different conclusions. Unlike credit ratings, which are generally very similar from one ratings agency to the next, there is little correlation between ESG ratings at the major ratings providers. Frequently one will rate a company highly while another does so lowly.

As a result, asking whether ESG analysis adds value makes no more sense than asking whether examining financial statements adds value; it all depends what you do with the data.

The views and opinions contained herein are those of Schroders’ investment teams and/or Economics Group, and do not necessarily represent Schroder Investment Management North America Inc.’s house views. These views are subject to change. This information is intended to be for information purposes only and it is not intended as promotional material in any respect.