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Purpose Environmental, social and governance (ESG) ratings are widely used by investors, equity analysts and policymakers to assess the non-financial (sustainability) performance of firms. However, the proliferation of ESG ratings from multiple agencies has led to significant discrepancies, causing confusion and raising concerns about the comparability and utility of these ratings. This study aims to systematically review the literature on ESG rating disagreement to identify its underlying causes, consequences and research gaps, thereby providing a comprehensive understanding of this emerging domain. Design/methodology/approach The article conducts a framework-based systematic review of 164 peer-reviewed articles sourced from the Scopus database. Bibliographic coupling is employed to identify key research clusters and map the intellectual structure of the field. Thematic maps are employed to identify the central and emerging themes in the area. Additionally, the theory–Context–Characteristics–Methods (TCCM) framework is used to analyze the dominant theories, contextual settings, variables (antecedents, consequences, mediators and moderators) and methodological approaches present in the existing literature. The study also outlines structured future research directions based on the TCCM framework and research clusters. Findings The analysis reveals six prominent research clusters. Four clusters emphasize the negative impact of ESG rating disagreement on stock performance, cost of capital, corporate innovation and audit fees. The remaining two clusters focus on the internal and external organizational factors that can potentially mitigate the adverse effects of ESG disagreement. The integrated conceptual framework maps the structural logic of ESG disagreement through ESG constructs to market- and firm-level outcomes. The findings highlight that ESG rating divergence has become a critical area of concern, gaining substantial scholarly attention, particularly in the last three years. Practical implications This review provides valuable insights for practitioners, policymakers and rating agencies by highlighting the consequences of ESG rating disagreement and the factors influencing it. It underscores the need for standardization, enhanced transparency in rating methodologies, and better communication among rating providers and stakeholders. The study also offers actionable guidance for firms to manage ESG-related risks and improve their sustainability reporting to reduce rating discrepancies. Originality/value To the best of the authors' knowledge, this is one of the most comprehensive framework-based systematic literature reviews, a TCCM-based review of ESG rating disagreement literature. By integrating bibliographic coupling with the TCCM framework, the study presents a holistic understanding of the field, identifies critical research gaps and proposes future research directions. This work contributes to advancing both academic inquiry and practical solutions in the ESG rating domain.
Singh et al. (Tue,) studied this question.