Implications Of ESG Rating for Sustainable Development

This study discusses environmental, social, and governance (ESG) rating and the implications of its divergence. Generally, a company's financial performance is positively impacted by a high ESG rating. However, the phenomenon of ESG divergence brought about by different ESG rating approaches has implications for multiple parties. In the analysis, on the one hand, many investors are positive about ESG rating differences because it highlights the complexity of ESG analysis. On the other hand, investors will obtain detailed information and data from a wide range of ratings to more fully understand the root causes of conflict. In addition, different countries and regions have different approaches to dealing with ESG rating discrepancies. This paper suggests that establishing a uniform measure of sustainable economic activity through legal policies is more beneficial in reducing ESG rating divergences.