ESG Rating Uncertainty: Causes, Consequences and Potential Remedies

ESG rating agencies disagree in their assessments of the same firms. The dominant policy response has been to pursue convergence through standardised disclosure and regulatory exercise. That response rests on an assumption that disagreement is primarily a measurement failure. Yet the academic literature is divided on whether this disagreement is a measurement failure to be corrected or a reflection of legitimate differences in values and priorities. This paper addresses that unresolved tension. Through a structured integrative review, we develop a four-dimensional framework tracing disagreement to its sources across what is rated, who is rated, who does the rating and how ratings are produced. Some disagreement reflects noise reducible through better standards; some reflects legitimate differences in what ESG performance means to different investors.