The pitfalls of (non-definitive) Environmental, Social, and Governance scoring methodology

Şahin, Özge Uysal; Bax, Karoline; Paterlini, Sandra; Czado, Claudia

doi:10.1016/j.gfj.2022.100780

Cited by 18 publications

(14 citation statements)

References 39 publications

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“…First, our findings provide clear and comprehensive guidance to researchers who are interested in using Asset4 to conduct quantitative CSR studies (Roberts & Wallace, 2015). Distinct from Berg et al (2020) and Sahin et al (2022) who examine the impact of changes in Asset4 ratings, our study focuses on how researchers use Asset4 and justify its usage. Furthermore, we also identify avenues for future research using Asset4.…”

Section: Introductionmentioning

confidence: 99%

Corporate social responsibility: A review of empirical research using Thomson Reuters Asset4 data

Villiers

Jia

2022

Accounting & Finance

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Section: Introductionmentioning

confidence: 99%

Corporate social responsibility: A review of empirical research using Thomson Reuters Asset4 data

Villiers

Jia

2022

Accounting & Finance

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“…Our results show the importance of knowing and understanding what is behind the ESG scores for investors. The investors can exclude the companies based on their low ESG scores in a given sector from their portfolios; however, Sahin et al (2022) reported that the companies still disclose their ESG information in time, increasing their ESG scores. Additionally, we discuss that using the proposed ESGM scores provides better risk performances than the ESG scores for such cases.…”

Section: Discussionmentioning

confidence: 99%

“…Recently, Berg et al (2021) noticed changes in the historical ESG scores given by Refinitiv. Additionally, Sahin et al (2022) discuss how the scores might differ for the five most recent years. Such changes, for instance, can arise from the release of missing information.…”

Section: Literature Reviewmentioning

confidence: 99%

“…These include a large discrepancy between ESG scores from different data providers (e.g., Berg et al (2020); Billio et al (2021); Gyönyörovà et al (2021)), as well as the possible update of ESG scores within 5 years from the data provider (e.g., Thomson Reuters [Refinitiv] scores are only definitive after 5 years). Moreover, ESG scores might be subject to changes due to a release of new ESG information, that is, the release of missing ESG information (e.g., Berg et al (2021); Sahin et al (2022)).…”

Section: Introductionmentioning

confidence: 99%

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Environmental, Social, Governance scores and the Missing pillar—Why does missing information matter?

Şahin

Bax

Czado

et al. 2022

Corp Soc Responsibility Env

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Environmental, Social, and Governance (ESG) scores measure companies' performance concerning sustainability and are organized in three pillars: Environmental, Social, and Governance. These complementary non‐financial ESG scores should provide information about companies' ESG performance and risks. However, the extent of not yet published ESG information makes the reliability of ESG scores questionable. To explicitly capture the not yet published information on ESG category scores, a new pillar, the so‐called Missing (M) pillar, is proposed and added to the new definition of the Environmental, Social, Governance, and Missing (ESGM) scores. By relying on the data provided by Refinitiv, we show that the ESGM scores strengthen the companies' risk relationship. These new scores could benefit investors and practitioners as ESG exclusion strategies using only ESG scores might exclude assets with a low score solely because of their missing information and not necessarily because of a low ESG merit.

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“…This is consistent with the study of (Breitenstein et al, 2021;Lööf et al, 2021;Rubbaniy et al, 2021), which showed a positive correlation and impact of the social responsibility in risk management. Thus, many studies supported the existence of this relation and pointed out evidence that social responsibility has a positive relation in confronting the reputational and operational risks according to the environment in which these studies were conducted (Zumente & Bistrova, 2021;Sahin et al, 2022).…”

Section: Second: Strategy Of the Social Performancementioning

confidence: 91%

impact of ESG strategies integration on the operational and reputational risks

Al-Qaruty¹,

Alhorani²,

Dabbaghia³

et al. 2022

ijhs

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This study aimed to demonstrate the impact of strategies integration of environmental, social and corporate governance strategies (ESG) on operational and reputational risks: a literature review for insurance companies listed on the Amman Stock Exchange. where the study population consisted of 22 Jordanian insurance companies, while the sample consisted of 8 companies, and one was excluded due to the lack of data, and based on the descriptive analytical approach, the study reviewed many previous studies related to its subject, and using the method of content analysis for annual reports and disclosures issued by Major insurance companies during the period 2020-2021, where a survey list was designed to measure the extent of the research companies' commitment to environmental, social and corporate governance strategies. The study concluded with many results, perhaps the most prominent of which is the presence of disclosure about social responsibility activities in the annual reports, and that all companies focused in their activities on providing donations and support to the local community and supporting education and health issues during the Covid pandemic period,,,

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The pitfalls of (non-definitive) Environmental, Social, and Governance scoring methodology

Cited by 18 publications

References 39 publications

Corporate social responsibility: A review of empirical research using Thomson Reuters Asset4 data

Corporate social responsibility: A review of empirical research using Thomson Reuters Asset4 data

Environmental, Social, Governance scores and the Missing pillar—Why does missing information matter?

impact of ESG strategies integration on the operational and reputational risks

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