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Navigating the Environmental, Social, and Governance (ESG) landscape: constructing a robust and reliable scoring engine - insights into Data Source Selection, Indicator Determination, Weighting and Aggregation Techniques, and Validation Processes for Comprehensive ESG Scoring Systems

This white paper explores the construction of a reliable Environmental, Social, and Governance (ESG) scoring engine, with a focus on the importance of data sources and quality, selection of ESG indicators, weighting and aggregation methodologies, and the necessary validation and benchmarking procedu...

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Autores principales: Liu, Yiting, Osterrieder, Joerg, Hadji Misheva, Branka, Koenigstein, Nicole, Baals, Lennart
Formato: Online Artículo Texto
Lenguaje:English
Publicado: F1000 Research Limited 2023
Materias:
Acceso en línea:https://www.ncbi.nlm.nih.gov/pmc/articles/PMC10568210/
https://www.ncbi.nlm.nih.gov/pubmed/37840702
http://dx.doi.org/10.12688/openreseurope.16278.1
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author Liu, Yiting
Osterrieder, Joerg
Hadji Misheva, Branka
Koenigstein, Nicole
Baals, Lennart
author_facet Liu, Yiting
Osterrieder, Joerg
Hadji Misheva, Branka
Koenigstein, Nicole
Baals, Lennart
author_sort Liu, Yiting
collection PubMed
description This white paper explores the construction of a reliable Environmental, Social, and Governance (ESG) scoring engine, with a focus on the importance of data sources and quality, selection of ESG indicators, weighting and aggregation methodologies, and the necessary validation and benchmarking procedures. The current challenges in ESG scoring and the importance of a robust ESG scoring system are addressed, citing its increasing relevance to stakeholders. Furthermore, different data types, namely self-reported data, third-party data, and alternative data, are critically evaluated for their respective merits and limitations. The paper further elucidates the complexities and implications involved in the choice of ESG indicators, illustrating the trade-offs between standardized and customized approaches. Various weighting methodologies including equal weighting, factor weighting, and multi-criteria decision analysis are dissected. The paper culminates in outlining processes for validating the ESG scoring engine, emphasizing the correlation with financial performance, and conducting robustness and sensitivity analyses. Practical examples through case studies exemplify the implementation of the discussed techniques. The white paper aims to provide insights and guidelines for practitioners, academics, and policy makers in designing and implementing robust ESG scoring systems.
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spelling pubmed-105682102023-10-13 Navigating the Environmental, Social, and Governance (ESG) landscape: constructing a robust and reliable scoring engine - insights into Data Source Selection, Indicator Determination, Weighting and Aggregation Techniques, and Validation Processes for Comprehensive ESG Scoring Systems Liu, Yiting Osterrieder, Joerg Hadji Misheva, Branka Koenigstein, Nicole Baals, Lennart Open Res Eur Research Article This white paper explores the construction of a reliable Environmental, Social, and Governance (ESG) scoring engine, with a focus on the importance of data sources and quality, selection of ESG indicators, weighting and aggregation methodologies, and the necessary validation and benchmarking procedures. The current challenges in ESG scoring and the importance of a robust ESG scoring system are addressed, citing its increasing relevance to stakeholders. Furthermore, different data types, namely self-reported data, third-party data, and alternative data, are critically evaluated for their respective merits and limitations. The paper further elucidates the complexities and implications involved in the choice of ESG indicators, illustrating the trade-offs between standardized and customized approaches. Various weighting methodologies including equal weighting, factor weighting, and multi-criteria decision analysis are dissected. The paper culminates in outlining processes for validating the ESG scoring engine, emphasizing the correlation with financial performance, and conducting robustness and sensitivity analyses. Practical examples through case studies exemplify the implementation of the discussed techniques. The white paper aims to provide insights and guidelines for practitioners, academics, and policy makers in designing and implementing robust ESG scoring systems. F1000 Research Limited 2023-07-26 /pmc/articles/PMC10568210/ /pubmed/37840702 http://dx.doi.org/10.12688/openreseurope.16278.1 Text en Copyright: © 2023 Liu Y et al. https://creativecommons.org/licenses/by/4.0/This is an open access article distributed under the terms of the Creative Commons Attribution Licence, which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.
spellingShingle Research Article
Liu, Yiting
Osterrieder, Joerg
Hadji Misheva, Branka
Koenigstein, Nicole
Baals, Lennart
Navigating the Environmental, Social, and Governance (ESG) landscape: constructing a robust and reliable scoring engine - insights into Data Source Selection, Indicator Determination, Weighting and Aggregation Techniques, and Validation Processes for Comprehensive ESG Scoring Systems
title Navigating the Environmental, Social, and Governance (ESG) landscape: constructing a robust and reliable scoring engine - insights into Data Source Selection, Indicator Determination, Weighting and Aggregation Techniques, and Validation Processes for Comprehensive ESG Scoring Systems
title_full Navigating the Environmental, Social, and Governance (ESG) landscape: constructing a robust and reliable scoring engine - insights into Data Source Selection, Indicator Determination, Weighting and Aggregation Techniques, and Validation Processes for Comprehensive ESG Scoring Systems
title_fullStr Navigating the Environmental, Social, and Governance (ESG) landscape: constructing a robust and reliable scoring engine - insights into Data Source Selection, Indicator Determination, Weighting and Aggregation Techniques, and Validation Processes for Comprehensive ESG Scoring Systems
title_full_unstemmed Navigating the Environmental, Social, and Governance (ESG) landscape: constructing a robust and reliable scoring engine - insights into Data Source Selection, Indicator Determination, Weighting and Aggregation Techniques, and Validation Processes for Comprehensive ESG Scoring Systems
title_short Navigating the Environmental, Social, and Governance (ESG) landscape: constructing a robust and reliable scoring engine - insights into Data Source Selection, Indicator Determination, Weighting and Aggregation Techniques, and Validation Processes for Comprehensive ESG Scoring Systems
title_sort navigating the environmental, social, and governance (esg) landscape: constructing a robust and reliable scoring engine - insights into data source selection, indicator determination, weighting and aggregation techniques, and validation processes for comprehensive esg scoring systems
topic Research Article
url https://www.ncbi.nlm.nih.gov/pmc/articles/PMC10568210/
https://www.ncbi.nlm.nih.gov/pubmed/37840702
http://dx.doi.org/10.12688/openreseurope.16278.1
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