The Financial Times’ Moral Money column has appraised ESG analysts in the light of the Wirecard collapse.

The article notes that both MSCI and Sustainalytics gave Wirecard median ratings, RepRisk placed it as a medium risk and Legal and General Investment Management (LGIM) gave the company a neutral score.

Possibly as a result, iShares and Vanguard held Wirecard stock in their some of their ESG funds, and few companies called the right shots, with Insight Investment giving the company its lowest ESG score.

The results shed light on the difficult and often misunderstood area of rating – given that the measurers are spread across several favours, and each measure may well given a significantly different weighting depending on the evaluation company’s system.

A more consistent measure would be a boon, but as with fund managers differing criteria ‘green’ each has a vested interest in avoiding direct comparison, or to be more charitable, each has a different view as to what it is.

As evidence mounts that ‘ESG’ stocks are outperforming ‘traditional’ ones, a new Wild West is on the horizon, unless some basic definitions and measures can be agreed.

Share Story: