ESG ratings have a future despite waning trust, investors say

illuminem summarises for you the essential news of the day, reviewed by our editorial team. Read the full piece on Responsible Investor or enjoy below:

🗞️ Driving the news: Investors continue to see a future for environmental, social and governance (ESG) ratings despite declining confidence in their reliability, according to a survey by the ERM Sustainability Institute
• The research highlights concerns about the quality and care behind ESG assessments, while showing that investors still consider these ratings useful for investment decisions
• MSCI was the only one of 13 providers to improve its quality score since 2023

🔭 The context: The survey included 53 responsible-investment professionals representing more than $23 trillion in assets under management
• Average trust in ESG ratings fell from 3.31 to 3.05 on a five-point scale compared with 2023
• Yet 42% of respondents expect ratings to remain important, and 62% believe corporate sustainability-disclosure requirements will drive greater use of them

🌍 Why it matters for the planet: Investors use ESG ratings to assess companies’ environmental performance and sustainability risks
• Improving the consistency and transparency of these assessments could help direct capital toward credible transition plans, while unreliable ratings risk misrepresenting corporate environmental impacts

⏭️ What’s next: ESG rating providers face pressure to improve data quality, explain their methodologies and address inconsistencies between assessments
• As sustainability disclosure requirements evolve, investors may need clearer, more comparable information to evaluate corporate performance and make informed decisions

📈 One stat: $23 trillion+ — the combined assets under management represented by the 53 investment professionals who participated in the survey

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