Since few asset managers have the resources to do their own in-house research, they increasingly rely on third-party providers to determine the course of their investments. (Photo: Shutterstock)

A new report from the American Council for Capital Formation is challenging the quality of environmental, social and governance (ESG) ratings provided by four ratings agencies, arguing that they are “subjective, inconsistent and lack standardization.”

According to a Nasdaq report, Morningstar data indicate that 70 percent of investors are interested in socially responsible investing, and millennials even more so at 80 percent, so it’s not likely that ESG is going to go the way of the dodo any time soon. However, ACCF’s report assesses the four major ESG ratings agencies, MSCI, Sustainalytics, RepRisk and ISS Environmental & Social Quality Score, and finds them wanting.

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Marlene Satter

Marlene Y. Satter has worked in and written about the financial industry for decades.

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