KAPSARC – From Metrics to Markets: Evaluating the Role of ESG Ratings

The main theme of the document is a critical analysis of the role of Environmental, Social, and Governance (ESG) ratings in steering sustainable investment decisions at the company and state levels.

The document analyzes the methodologies of major rating providers and highlights significant discrepancies in ESG assessments due to varying metrics, factor weightings, data sources, and commercial motives. Key findings include the impact of ESG ratings on investment decisions and capital costs, as well as the need to reform methodologies for more inclusive and forward-looking ESG frameworks that consider decarbonization and local governance contexts.