Highlights and insights:
“This article describes the market for ESG ratings, including types of ratings and key providers, and presents several use cases.
In the absence of a regulatory framework, several issues and risks reduce the potential benefits of these ratings.
The lack of a common definition and of comparability, together with transparency issues, could be ultimately detrimental to the transition towards a more sustainable financial system. To illustrate the impact of these issues on investors, our analysis focuses on the specific case of ESG benchmark construction.” (Author summary)