Report

Data for Public Good: Steering the role of ESG ratings and data product providers

The role of ESG ratings and data products has increased significantly. CDP is tracking developments closely and guiding policymakers

The role of ESG ratings and data products has increased significantly in financial markets with 94% of investors using them at least once a month. Despite the rapid increase in availability and use of these products, studies remain limited.

As jurisdictions begin to introduce voluntary codes of conduct and regulatory frameworks aimed at these products' providers, CDP is tracking developments closely and guiding policymakers toward impact interventions while avoiding fragmentation.

Explore our reports and resources below, including our latest report, “Taking Stock of ESG Ratings and Data Product Regulations”, and interoperability tool.

A close-up photo of a candlestick graph showing increases and decreases in data level. Increases are green and decreases are red, the data's source is unknown.

Tracking Progress: Taking Stock of ESG Ratings and Data Products Regulation

Published: August 2024

In 2024, several jurisdictions have progressed their efforts to publish codes of conduct or regulatory frameworks targeted at ESG Ratings and Data Product Providers. Our report takes stock of these initiatives, assessing the uptake of IOSCO’s recommendations and compares their alignment to support policymakers and industry players to navigate this fast- evolving landscape.

View the report

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Interoperability tool

Our tool is a compilation of the tables featured in the appendix of our report, "Tracking Progress: Taking Stock of ESG Ratings and Data Products Regulation". The tool can be used to identify equivalencies across different regulatory requirements in this space.

Download the tool

The front cover of CDP's report into Data for Public good, featuring a city Scape beneath the title.

Data for Public Good – Full Report

Published: July 2023

Regulators are exploring ways to ensure products are not used for greenwashing, but rather support the allocation of capital to sustainable activities. In this landmark report, we unpack the scrutiny these tools are now facing and recommend the way forward.

Download the report

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Data for Public Good – Executive Summary

Published: July 2023

An executive summary of our report, “Data for Public Good – Steering the Role of ESG Ratings and Data Products Providers”, including shortcomings associated with ESG ratings and data products as well as our recommendations.

View the summary

Translated versions of our Data for Public Good Full Report and Executive Summary are available:

Ex-ante vs ex-post challenges

Significant shortcomings have been identified concerning the objectives and methodologies for collecting data, rating and benchmarking for ESG ratings, and data products providers. CDP's “Data for Public Good” report examines these shortcomings and analyzes how policymakers are addressing these issues, worldwide.

CDP categorizes ESG data shortcomings into "ex-ante" and "ex-post" challenges.

Ex-ante refers to challenges associated with ESG data. Even though they exist despite ESG ratings and data products, their existence directly impacts the construction of these tools.

Ex-post challenges, on the other hand, refer to those directly inherent in the construction and issuance of ESG ratings and data products, such as the (non) transparency of methodologies and management of conflicts of interests.

A diagram depicting the relationship between Ex-ante and Ex-post data and ratings. ESG data goes in, gets processed, and then leaves as ESG ratings and data products.

Regulatory fragmentation

The exponential growth of ESG ratings and data products, coupled with concerns about their shortcomings, have led some policymakers and regulators to take a closer look at the functioning of the market. While at an early stage, the different initiatives being developed in this policy area indicate a potential fragmentation in the regulatory architecture of ESG ratings and data products.

This fragmentation poses significant challenges to both regulators and market players as “ESG ratings” may come to mean different things in different geographies. It also risks stopping policymakers from achieving their core objectives: regulating the functioning of the market, increasing transparency and trust, ensuring ESG-related tools are used for public good, and deterring greenwashing schemes.

Jurisdictions engaging on regulatory developments for the provision of ESG ratings and data products.

Click on a jurisdiction to see its status.

In addition to supporting businesses to access capital, ESG ratings and data products also play a role driving business efficiency. The data and analytics provided through these tools can inform decision-makers – from senior management to the board of directors and investors – about bottlenecks, risks and opportunities, as well as to how remain competitive and reduce their portfolio impacts.

As companies navigate a new era of mandatory disclosure and standards, these tools can support businesses and FIs to demonstrate compliance. When science-based and transparent, ESG ratings and data products can help regulators, corporations, financial institutions and other decision-makers to surface the information to drive progress toward a sustainable future and support the allocation of capital towards global environmental agendas, such as the Paris Agreement and the Montreal-Kunming Global Biodiversity Framework.

Browse our reports and resources to learn more about CDP's recommendations for policymakers.

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