GRI has summarised the key talking points from its recent webinar on ESG ratings – which brought together representatives from ratings agencies, companies, investors and academia.
Five insights:
- Different ratings providers use distinct methodologies - Some focus on financial materiality and investor risk, while others focus on impacts, transparency and governance
- Companies should prioritise reporting fundamentals - Companies that establish strong sustainability disclosure practices are better positioned for rating assessments, and reporting can reduce the burden of responding to multiple providers
- Investors look beyond headline scores - Investors frequently examine underlying indicators, metrics and disclosures to understand companies’ risks and opportunities
- Reporting standards shape ratings market - Disclosure requirements provide more information to investors and ratings providers, however ratings methodologies often go beyond regulatory requirements
- Transparency is increasingly important - Ratings providers are increasingly expected to explain how assessments are carried out and conclusions are reached