ESG Ratings: Say AAA
“Zeg 'ns Aaa” was a Dutch comedy series from the 1980s and '90s that followed the lives of a female general practitioner, a male surgeon, and their chaotic household. Farcical misunderstandings, fast-paced dialogue, and humorous interpretations turned the family’s and practice’s daily challenges into lighthearted chaos with a laughing finale. That finale, in particular, was classic: everything back to normal and everyone on the same page again.
In the world of credit ratings, AAA means “extremely reliable.” No debate, no nuance—and it doesn’t matter which agency issues the rating: the outcome is always the same. Complete alignment. However, with ESG ratings, we’re not even close to that level of consistency.
AAA: Reliability without debate
A study titled “Aggregate Confusion: The Divergence of ESG Ratings” by MIT’s Sloan School, published in the Review of Finance in 2022, analyzed ESG scores from six leading rating agencies (like Sustainalytics, MSCI, and Moody’s ESG). It found that the average correlation between their scores was only 0.54–0.61. If credit ratings were that inconsistent, one agency might call a company “very creditworthy” while another calls it “high risk of default.” Unthinkable, of course—but that’s what such a correlation implies. For comparison: credit rating correlation is typically 0.99.
The doctor analogy: Diagnosing ESG
Speaking of doctors, how fitting that “Zeg 'ns Aaa” was about them. There’s an irony here: ESG analysts sometimes seem like doctors giving different diagnoses based on the same symptoms or maybe even failing to recognize those symptoms at all. That’s the result of using different criteria, weightings, scopes, and methodologies. You end up with different outcomes. It’s almost as if each ESG rating agency hires a different medical specialist. No wonder the results vary.
Embedding ESG in culture
I’ve often hinted that, for now, the path and direction matter more than a top rating. This may be a topic for a future blog, but I’m not aware of any ESG rating agency that actually visits a site to verify what’s been submitted on paper. I’m not making accusations—but I do think that step is missing. Come take a look at the tidy kitchen and spotless toilets.
At Logicall, we boiled CSRD down to one word: Transparency. Even though implementation has been delayed for many companies, its arrival brings at least one benefit: focus—on reporting standards, comparable data, and the requirement for external assurance.
Until then, we’ll keep working to embed ESG into our policies, systems, processes—and most importantly: our people. We’re not worried. If you embed it well, you’ll naturally score in the higher ranges. Whether that’s a perfect 10 or a 9.5? Easy to explain.