Environmental, Social, and Governance Ratings : Risks, Regulations, and Market Dynamics / Patrycja Chodnicka-Jaworska.

List of Figures -- List of Tables -- List of Abbreviations -- Introduction -- Notes -- References -- Part 1: ESG ratings ; Chapter 1: ESG ratings: Main problems ; ESG rating versus ESG scoring ; ESG rating versus credit rating ; Main ESG rating agencies ; Stages of ESG analysis ; Implication of ESG ratings ; References ; Chapter 2: Problems regarding ESG measures ; Types of problems regarding ESG measures ; Methodology as one of the main problems ; Source of data ; Missing data ; Conflicts of interests and ESG rating inflation ; Greenwashing in ESG ratings ; Methods of increasing the quality of ESG ratings ; Note ; References -- Part 2: Market dynamics and ESG ratings impact ; Chapter 3: ESG rating inflation ; Solicited and unsolicited ESG ratings ; Model of payment ; Internal and external ESG ratings ; Note ; References ; Chapter 4: Factors influencing the quality of ESG ratings ; Size of the rated company bias ; Geographical location bias ; Sectoral bias ; Note ; References ; Chapter 5: Impact of data greenwashing on financial market ; ESG ratings data greenwashing and stock prices ; Reaction of bond market on ESG ratings data greenwashing ; Data greenwashing on investment funds activity ; Notes ; References -- Part 3: ESG regulations and governance ; Chapter 6: Regulations regarding ESG measures ; European regulations regarding ESG ratings ; ESG ratings in solvency regulations ; International initiatives ; Notes ; References -- Main conclusions and implications -- Appendix 1: LASSO models description -- References -- Index.

In recent years, the world of finance and investments has changed, considering measures related to environmental, social, and governance (ESG) factors for socially responsible investments. ESG scoring and ratings are used to estimate ESG risk.This book presents ESG ratings and scorings and their providers and lists problems with data quality, data sources, and unknown methodology, contributing to the green- and social-washing ESG rating phenomenon. The value of assets invested in green instruments relies on high-quality ESG ratings to measure green transition. Data greenwashing negatively impacts the financial market, especially the stock price, fund activities, and bond markets. The size of the rated company, geographical location, and industry biases are considered in understanding the greenwashing phenomenon. This book illustrates all the problems related to ESG rating inflation, conflicts of interest, models of payment, and internal and external ratings. It describes current regulations, initiatives, and practical knowledge of ESG scoring.Academics and students of financial law, economics, and financial sustainability will find this book invaluable. The practical implications in the book will benefit sustainability-concerned regulators and practitioners who estimate ESG risk (especially in financial institutions).