Data for Public Good: Steering the role of ESG ratings and data product providers

The role of ESG ratings and data products has increased significantly in financial markets with 94% of investors using them at least once a month. Despite the rapid increase in availability and use of these products, studies remain limited.

As jurisdictions begin to introduce voluntary codes of conduct and regulatory frameworks aimed at these products' providers, CDP is tracking developments closely and guiding policymakers toward impact interventions while avoiding fragmentation.

Explore our reports and resources below, including our latest report, “Taking Stock of ESG Ratings and Data Product Regulations”, and interoperability tool.

Translated versions of the Data for Public Good Report and Executive Summary are available below.

Significant shortcomings have been identified concerning the objectives and methodologies for collecting data, rating and benchmarking for ESG ratings, and data products providers. CDP's “Data for Public Good” report examines these shortcomings and analyzes how policymakers are addressing these issues, worldwide.

The exponential growth of ESG ratings and data products, coupled with concerns about their shortcomings, have led some policymakers and regulators to take a closer look at the functioning of the market. While at an early stage, the different initiatives being developed in this policy area indicate a potential fragmentation in the regulatory architecture of ESG ratings and data products.

This fragmentation poses significant challenges to both regulators and market players as “ESG ratings” may come to mean different things in different geographies. It also risks stopping policymakers from achieving their core objectives: regulating the functioning of the market, increasing transparency and trust, ensuring ESG-related tools are used for public good, and deterring greenwashing schemes.

In addition to supporting businesses to access capital, ESG ratings and data products also play a role driving business efficiency. The data and analytics provided through these tools can inform decision-makers – from senior management to the board of directors and investors – about bottlenecks, risks and opportunities, as well as to how remain competitive and reduce their portfolio impacts.

As companies navigate a new era of mandatory disclosure and standards, these tools can support businesses and FIs to demonstrate compliance. When science-based and transparent, ESG ratings and data products can help regulators, corporations, financial institutions and other decision-makers to surface the information to drive progress toward a sustainable future and support the allocation of capital towards global environmental agendas, such as the Paris Agreement and the Montreal-Kunming Global Biodiversity Framework.

Browse our reports and resources to learn more about CDP's recommendations for policymakers.

Translated versions of our Data for Public Good Full Report and Executive Summary are available:

• Thai: full report, executive summary
• Spanish: full report, executive summary
• Portuguese: full report, executive summary
• Japan: full report

Further reading

Learn more about CDP's policy work and program areas.