Corporate Climate Ratings: Assessing Divergence from Scientific Expectations
Résumé
Private investment and consumption choices encourage companies to cut greenhouse gas emissions and prepare for climate change, but unreliable corporate disclosure complicates decision-making. Since the 1990s, sustainability scores like labels and rankings have helped guide choices, though they also face growing criticism. In this context, we systematically review criticism and assess climate performance scoring systems against our findings. Our approach includes a comprehensive literature review, an identification of score providers and their offerings, and an assessment of scores against best-in-class practices. We find scholarly concerns are related to the accuracy, reliability, fairness and effectiveness in driving corporate action of ESG scores. Market actors exhibit diverse business models, methodologies, and definitions of corporate climate performance. Despite some variability across scores and issues, they remain generally opaque and poorly aligned with academic expectations. While indirect corporate impacts and industry and size specificities are typically taken into account; standardized, verified inputs, and transparent, science-based weightings are rare. Investors, corporations, and researchers might use our results to make an informed decision when choosing their information provider, while regulators might take interest in the snapshot we provide on the maturity of the market. This article can also inspire the design of improved sustainability information systems.
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