Money is being spent on stocks that perform well on issues such as building a diverse workforce and reducing carbon dioxide emissions. However, due to the inconsistent way of evaluating, it is almost impossible to grasp the performance of companies with high evaluation and those with low evaluation.
A closer look at stock ratings and performance ranked by three major providers of data on environmental, social and governance standards can allow companies to have very different ratings.
Depending on the time period and provider, top-ranked ESG stocks are either outperforming or lagging behind the market. Low-ranked stocks, which are generally considered polluted and poorly treated by workers, can outpace top ESG stocks and the market as a whole.
Company rankings vary widely from provider to provider, so it is inconsistent which group wins and which loses. ESG scores measure multiple factors, including financial conditions, the risks posed by climate change, and the company’s efforts to mitigate them. According to data providers, ESG works in the long run, allowing investors to use scores from multiple evaluators to create their own strategies.
Ratings are currently receiving new attention as the Securities and Exchange Commission is considering regulations on disclosures in areas such as climate change exposure and carbon emissions.
ESG stock performance depends on who ranks ESG stocks
Source link ESG stock performance depends on who ranks ESG stocks