ESG score and rater effect - A critical assessment of divergences in Refinitiv-based ESG ratings

This thesis analyzes the internal dispersion in ESG (Environmental, Social, and Governance) ratings, applying the method developed by Berg et al. (2022) as a reference. Unlike other studies which compare multiple rating agencies with each other, this study focuses exclusively on Refinitiv to assess how scope, measurement, and weighting contribute to different ESG ratings. The results demonstrate that the choice of which indicators to consider (scope) explains 45% of the variance, followed by measurement (30%) and weighting (25%). These findings indicate that there may be substantial divergence even within a single provider, and raise questions about transparency, consistency, and comparability of the ratings. The thesis suggests the importance of a more critical use of ESG scores and the need for greater methodological transparency.