Gambling on Green

Chapter 6The Role of Ratings

Throughout this book, we have examined case studies of firms using sustainability considerations to gain competitive advantage, as well as those that have mismanaged and misled stakeholders on sustainability initiatives, suffering reputational and financial damage. In Chapter 5 we discussed the value of insight into regional ESG progress for business leaders. As we discovered, country ratings, along with existing and upcoming regulations, are especially important to understand when you are considering expanding into a region, or when onboarding suppliers operating in another country. Later in the book (in Chapter 9), we will identify key standards and frameworks that executives need to consider when building their company's own ESG reports.

For now, a pressing question a business leader needs to answer is: how will the information about your corporation's sustainability efforts be gathered, scored, and used by investors and other stakeholders? It's the role of ESG ratings companies to deliver objective, transparent insights that investors, asset managers, companies, not-for-profits, even consumers, and other stakeholders can rely on when assessing company ESG performance or building a portfolio.

This chapter will give you details about the evolution of these largely for-profit firms, along with the scope of factors and methodologies they use to craft ratings on your company. Importantly, this section will also explore strategies your company can ...