The impact of ESG rating disagreement on the financial performance of environmentally sensitive industry companies worldwide

Abstract

Many studies have examined the relationship between environmental, social and governance performance (ESGP) and financial performance (FP) across various sectors. However, the statistical results of previous studies exhibit variability, including significant and insignificant positive or negative relationships. Moreover, the effects of using ESG ratings from different databases are rarely considered. This paper investigates the sensitivity of data results from different ESG rating agencies by analyzing the ESG ratings of the same companies from the Bloomberg and Refinitiv databases over a 10-year period, covering 464 companies in environmentally sensitive sectors worldwide. Through examining the relationship between ESGP and FP, our research offers potentially valuable insights into the consequences of using different ESG ratings from different rating agencies. The results indicate that using different ESG scores from different rating agencies significantly alters the main results of such studies in the literature and, consequently, influences researchers' and investors' decision-making processes, depending on which ESG data source is utilized.

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