The role of ESG ratings and data products has increased significantly in financial markets. An estimated 94% of investors use ESG ratings and data products at least once a month.
Despite the rapid increase in availability and use of these products,
studies remain limited.
In this landmark report, we unpack the scrutiny these tools are now facing. Regulators are exploring ways to ensure that products are not used for greenwashing, but rather to support the allocation
of capital to sustainable activities. Here, CDP recommends the way forward.
Translated versions of our report and executive summary downloads are available.
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 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.
ESG ratings and data products can support decision-making towards global environmental agendas such as the Paris Agreement, the Sustainable Development Goals, and the Global Biodiversity Framework. To ensure that these tools are used for public good, a series of improvements in the space of ESG data and analytics must occur.
Download translated versions:
Thai: full report, executive summary
Spanish: full report, executive summary
Portuguese: full report, executive summary
Japan: full report
We will add other translated versions once they are live.
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