FT News Briefing Rating the ESG raters
Oct 3, 2023
The podcast delves into Kristalina Georgieva's support for IMF reforms that could elevate China's influence. It highlights regulatory calls for transparency among ESG rating agencies, addressing the limitations in their scoring systems. Meanwhile, the booming Oktoberfest emerges as a surprising bright spot in Germany's economy, juxtaposing the broader economic challenges. Additionally, it touches on the EU's strategic funding moves for Ukraine, reflecting complex political dynamics.
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ESG Ratings Focus
- ESG ratings assess a company's management of ESG risks, not their actual impact.
- This focus on risk management, rather than environmental impact, is a key distinction.
ESG Ratings Flaw
- A major problem with ESG ratings is that they don't directly measure a company's environmental impact.
- They instead evaluate how ESG risks could affect a company's profits.
ESG Rating Conflicts
- Conflicts of interest arise in ESG ratings as agencies may interact with the companies they rate.
- This interaction creates potential bias in the ratings process.