LONDON, March 27 (Reuters) – Corporations are spending as much as half one million {dollars} a yr on a sustainability score to satisfy investor calls for for such information, but are sometimes dissatisfied with the outcomes, new analysis exhibits.
Publicly-listed firms spend, on common, between $220,000 and $480,000 on ratings-related prices per yr, with their non-public counterparts being billed for as much as $425,000, based mostly on a survey by sustainability consulting agency ERM.
Widespread criticisms associated to the accuracy and transparency of the information and rankings, in addition to an organization’s potential to right errors, the report stated.
Rising demand for environmental, social and governance (ESG) information and a reliance by many smaller traders on exterior suppliers to evaluate firms has pushed speedy development of the unregulated business, drawing the eye of regulators.
The ERM report stated firms’ dissatisfaction with the accuracy of rankings was based mostly largely on their expertise of discovering errors in raters’ evaluation of firm provided information, undermining their belief within the total score.
Nearly a 3rd of the 104 firms surveyed stated they’d a “low” to “very low” confidence that the ESG rankings precisely mirrored their ESG efficiency.
However they’re pushed to safe rankings by investor demand, with 95% of firms saying this was an element for them partaking with ESG raters.
Buyers, too, are spending giant quantities on ESG information and rankings, with prices ranging between $175,000 and $360,000, the ERM stated, though many reported having solely “reasonable confidence” within the accuracy and utility of those rankings.
Reporting by Virginia Furness; enhancing by Simon Jessop and Jane Merriman
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