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Studio Paci
Nov 21, 20232 min read

Impact of ESG Rating on Companies and Stakeholders


šŸ“‘šŸš€ Introduction


"The webinar "The commitment of the Italian Academy for Sustainable Finance: focus on ESG rating," within the SRI Weeks organized by the Forum for Sustainable Finance, highlighted how companies with ESG ratings, both in the financial sector and beyond, generate significant added value. However, this value is not evenly distributed among all stakeholders, with the state and shareholders benefiting more at the expense of employees and investors.

Developments and Research:

Since 2015, the Forum for Sustainable Finance has promoted the Italian Academy for Sustainable Finance, a network of teachers and researchers focused on sustainable investments. The recent event presented the "Manifesto of the Italian Academy for Sustainable Finance," emphasizing the role of education and research in the field of ESG investments. Methodologies for ESG assessments have been at the forefront of this initiative, aiming for increasing effectiveness."


šŸ“ššŸ”Research Topics:

  1. Alignment of the Italian Banking Sector with the EU Taxonomy: Studies have shown that Italian banks are aligned with the EU Taxonomy in 19% of cases, with a slight increase among larger banks. This suggests room for improvement, especially considering the importance of the Taxonomy in the context of the banking ESG Score.

  2. Similarity of Portfolios and ESG Performance: It has been observed that greater heterogeneity in portfolios results in higher sustainability performances, particularly in terms of COā‚‚ emissions. More diversified portfolios tend to reduce emission intensity.

  3. ESG Ratings and Value Distribution: Research has highlighted that, although ESG ratings capture a multi-dimensional value dimension, there are significant limitations.

These include varying methodologies, discretion in assessment, and the risk of greenwashing. Furthermore, they do not adequately consider how added value is distributed among various stakeholders.



šŸ”šŸ”šConclusions:

Companies with ESG ratings show a higher added value, but the distribution of this value is not equitable. Stakeholders such as the government and shareholders receive the majority of the value, while employees and financiers are less favored.

This underscores the need for a more equitable distribution of the value generated by ESG practices



šŸ“šŸ“ŒSummary of Key Points:

  • Added Value and Distribution: Companies with ESG ratings generate more value but do not distribute it equitably among stakeholders.

  • Role of Education and Research: The Italian Academy for Sustainable Finance emphasizes the importance of education and research in improving ESG assessments.

  • Banking Sector and EU Taxonomy: Italian banks demonstrate partial alignment with the EU Taxonomy.

  • ESG Performance and Portfolio Diversification: Greater diversification leads to better sustainability performance.

  • Limits of ESG Ratings: Methodological diversity and lack of consideration for the equitable distribution of value among stakeholders.

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