Gartner Insights Abstract

How to Understand ESG Ratings and Set Long-Term Strategic Plans

Published: 06 February 2024

Summary

ESG’s increasing importance has led to a proliferation of ratings providers that review an organization’s ESG performance and assign it a rating on related concerns. Strategy leaders should use this research to understand ESG ratings and set long-term ESG goals for their organizations.

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Overview

Key Findings
  • A number of environmental, social and governance (ESG) ratings providers influence key stakeholder groups like investors, employees, community organizations or activists, and supply chain partners, and each has distinct scoring methodologies.

  • Although ESG ratings shouldn’t dictate an organization’s ESG strategy, awareness of ratings helps organizations identify material strengths and vulnerabilities and ensures that disclosures meet both regulatory requirements and public expectations.

  • Understanding which ratings are important to key stakeholders enables strategy leaders to decide on long-term ESG commitments, shift perceptions of the organization and strengthen ESG efforts, both internally and externally.

  • Organizations should, however, consider ratings as an input

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Analysts:

Shome Advani

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