The Materiality Challenge of ESG Ratings

Abstract Research purpose. The ESG literature supports a positive correlation between firm’s performance and its financial performance; however, the details of this relationship are ambiguous, which has led to conflicting results in literature. This article asserts that ambiguity is largely related fact studies rarely consider important issue materiality. an expanded replication analysis by Williams ---amp--- Apollonio (2022), study called for deeper both materiality causal link ratings performance. Design / Methodology Approach. methodology calculates Pearson Correlation coefficients Bloomberg scores abnormal returns S---amp---P 500 firms from 2020 2022 after controlling material GICS sectors. Findings. show no returns, conclusion sectors not will clarify presumed Originality Value Practical implications. one few addresses ratings. finding does sufficiently control significant building block future researchers. suggests more granular categorization sub-industries using larger sample than likely be useful research.