S.E.R.G. WP Series #01-2025: "Corporate Climate Ratings: Assessing Divergence from Scientific Expectations"

2025 - Marine Kohler, Pascal da Costa, François Cluzel and Löic Umbricht

Private investment and consumption choices serve as a major driver to push companies to cut their greenhouse gas emissions and prepare for climate change. Sustainability scores, labels and rankings have helped guide these decisions since the 1990s, but are now coming under increasing scholarly criticism. In this context, we performed a systematic review of this criticism and tested the findings against current climate performance assessment tools. Our approach includes a comprehensive literature review, an inventory of climate-related scores, labels and ranking providers and their offerings, and an assessment of scores against best-in-class practices for each issue. We find the concerns raised in the scientific literature are related to the accuracy, reliability, and fairness of the tools, and whether they are effective in driving corporate action. Tool providers were found to use a diversity of business models, methodologies, and definitions of corporate climate performance. Despite some variability across tools and concerns, we find tools remain generally opaque and poorly aligned with scientific expectations. While corporate climate performance systems typically address indirect impacts and industry and size specificities; they rarely use standardized, verified inputs, and transparent, science-based weightings. Investors, corporations, and researchers can use our results to inform their choice of information providers, and regulators might take interest in the snapshot we provide on the maturity of the corporate climate performance measurement market. This paper aims to initiate improvements in the design of sustainability information systems.

Rating; Score; Label; Climate; Corporate; ESG; CSR.