Does ESG rating disagreement affect patient capital?

Environmental, social, and governance (ESG) rating disagreement significantly reduces patient capital investments—long-term, risk-tolerant investments from pension funds, social security funds, and strategic equity investors. The disproportionately larger effect on strategic equity relative to relational debt suggests that equity investors are particularly sensitive to ESG information quality concerns. Results remain robust after using propensity score matching and instrumental variable methods. We identify two channels for this effect: increased analyst forecast bias exacerbating information asymmetry, and elevated ESG compliance risk triggering investor risk aversion. Cross-sectional analyses reveal stronger effects for firms with lower ESG greenwashing and fewer financing constraints.