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Texas Tech University

Prof. Jean-Charles Garibal

Cross-dispersion bias-adjusted ESG rankingsProf. Jean-Charles Garibal - Grenoble School of Management

Date:
Friday, Feb. 3, 2023
12:00 PM—1:00 PM
Location:
online

Cross-dispersion bias-adjusted ESG rankingsProf. Jean-Charles Garibal - Grenoble School of Management

We study the formation of ESG scores and rankings. In particular, we investigate the impact of aggregation rules when combining information on firms across categories, notably the E, S and G categories, into single ESG scores. Usual aggregation rules may bias scores toward the most dispersed category. We suggest a correction for this dispersion bias. We apply this correction to scores provided by two of the main score providers: Refinitiv and Bloomberg. We also provide simulation evidence. We show that the cross-dispersion bias may have a significant impact on ESG scores formation and that our proposed adjustment tends to weather it.