Analysis of ESG Ratings Methodologies in the Russian Market: Transparency and Convergence Issues

Abstract

The reliability of ESG ratings as a tool for assessing the sustainability performance of organizations has been extensively studied and often questioned by researchers and international organizations. In response to the criticism, national regulations have emerged to address the problems identified in the ratings and their causes. Russia is no exception, where the market for ESG ratings has grown significantly in the last two years.

The aim of this article is to assess the level of transparency of ESG ratings methodologies in the Russian market and to determine whether there is a convergence of methodologies.

To achieve this goal, based on the publications of foreign and Russian authors, international organizations and the Bank of Russia, the author analyzed the methodologies for assigning leading Russian ratings, developed and applied a methodology for assessing the level of transparency of such methodologies on the basis of ten parameters.

The article provides a brief overview of the main problems inherent in ESG ratings and addressed in the literature, as well as the way they are addressed by regulatory norms in a number of foreign countries and in the Russian Federation. In order to verify the implementation of the Bank of Russia’s recommendations in the updated ESG rating methodologies, the approaches of four agencies—Analytical Credit Rating Agency, Expert RA, RAEX, and National Rating Agency—were analyzed from the point of view of transparency and convergence; the methodologies of the agencies were assigned transparency scores.

Conclusions were drawn on a certain convergence of the agencies’ approaches to ESG assessment, mainly in terms of rating scales and weighting of ESG components, as well as on the generally high level of transparency of Russian ESG rating methodologies.