Scientific Beta

Money: "Until ESG ratings reasonably accurately measure what their providers intend them to measure, and until investors understand what these intentions are, ESG ratings are a source of investor misinformation. And instead of trying to fix the irreparable, Australia would be better off discouraging the use of ESG scores for investor information purposes."

Money 12/09/2024

Article by Daniel Aguet, Deputy CEO and Index Director at Scientific Beta

"(...) The Australian financial regulator ASIC recently published a report on its actions against greenwashing misconduct and concluded that its "surveillance indicates there is ample room for improvement". (...) Hence, going forward the regulator should shift its focus from simply checking whether investment managers use the scores the way they say they do, or whether these scores provide investors with any accurate, reasonably grounded and easily understandable information at all. (...) Until ESG ratings reasonably accurately measure what their providers intend them to measure, and until investors understand what these intentions are, ESG ratings are a source of investor misinformation. And instead of trying to fix the irreparable, Australia would be better off discouraging the use of ESG scores for investor information purposes. (...)"