Comparative analysis of the environmental component when assigning an ESG rating

Abstract

A significant problem with ESG (environmental, social, governance) ratings is their weak or complete incomparability. To assess the degree of divergence between the methodologies presented on the Russian market, the author conducts a series of studies aimed at comparing them in terms of three components: environmental (E-environment), social (S-social), and management (G-government). The current study is the second work, the purpose of which is to analyse the methods used to evaluate the E-component of the leading rating agencies in the Russian Federation. The series uses methods of rating and expert assessment as well as comparative analysis. The “Rosseti” holding company acts as the object of application of the methodologies. The result are the development and detailisation of the conclusions reached in the first part devoted to the S-component; the identification of a number of differences in approaches and conclusions when analysing the environmental component of ESG data providers, which, however, are not radical, irreconcilable. A special feature of the ongoing research series is its applied nature, which allows us to see differences in the methods of conducting ESG analysis of various ESG data providers. The results obtained will be useful for investors that seek to consider environmental criteria when making decisions as well as for companies that wish to increase their attractiveness by improving environmental sustainability. The analysis of the management component (the G-component).will be the logical development of the research series.