ESG Scores. A Critical Review of Sustainability Measurement

This Bachelor’s thesis critically examines ESG (Environmental, Social, Governance) scores as tools for measuring corporate sustainability. As sustainable investing gains momentum, institutional and retail investors increasingly rely on ESG ratings from third-party providers. However, these scores often diverge significantly across agencies, raising concerns about transparency, comparability, and their usefulness in capital allocation.

The thesis analyzes and compares the methodologies of five major ESG rating agencies—MSCI, Refinitiv, Sustainalytics, RobecoSAM, and ISS-oekom. The question is how this can occur, since the same company cannot have different ESG performances. To what extent are ESG scores of different agencies comparable? Is there a certain ESG score investors can rely on? Do ESG scores materially impact risk and return factors which are mainly considered by investors? How do they affect companies’ ESG performance and daily business? The objectives of this thesis are derived from these questions. Above all, it should be clarified why ESG scores show such a divergence. It is also important whether the ESG scores impact capital markets or the companies themselves because an impact would increase the overall significance of ESG scores. To answer these objectives, ESG as a sustainability concept and its associated investment approach will be explained in more detail to provide a baseline. Afterwards, the origin of ESG scores is described.