Deloitte Climate & Sustainability Competency Lab
The lecture will delve into the ecosystem of ESG (Environmental, Social, and Governance) raters, with a focus on what distinguishes them from corporate ESG disclosures. Next, the webinar will unravel how these ratings are leveraged by financial markets, and identify the ones that significantly influence financial decision-making. Moreover, light will be shed on how they are constructed, as well as the common problems that are associated with these kinds of methodologies. As a culmination of the talk, the most urgent issue - measurement noise, offering insight into potential avenues for improvement in the short and long run – will be unfolded.
Deloitte Climate & Sustainability Competency Lab
About the speaker
Florian Berg is currently a research scientist at the MIT Sloan School of Management where he cofounded the Aggregate Confusion Project. His research interest covers sustainable investing with a focus on ESG ratings, the disagreement between different rating agencies, and how it affects investors, firms, as well as academic research.
He received his PhD in economics from Paris-Dauphine University. During his PhD, he held a visiting research position at ETH Zurich. Florian worked as a quantitative researcher at Amundi Asset Management and as a quantitative strategist/ trader at Alphadyne Asset Management. He taught at Paris-Dauphine University, Sciences-Po Paris, and MIT Sloan.
Interview with Florian Berg
C-TAKEAWAYS: Fast facts for the C-level
- ESG ratings differ quite a lot.
- ESG divergence doesn’t make the signal less valuable.
- ESG ratings strongly contribute to data accessibility and reducing the moral distance from investments.
- ESG ratings and measurement will only rise in importance.
- Make the best out of ESG ratings so to benefit from the advantages of the potential lower cost of capital.
- Create a direct information flow with the ESG department to know what's going on in your company.
- Know your disclosure and then work on having a better rating.
- Even if you disagree with ESG ratings, remember that they are very important within the market.
- Use ESG ratings to create a positive impact on society.
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