The Analysis of ESG Ratings Between Korean and Global Agencies from the Sectoral Perspective

Despite the burgeoning prominence of ESG factors and the attendant emphasis on accurate evaluations, discrepancies arise due to divergent rating methodologies and regional specificities. Utilizing data from 2015 to 2022, this study examines discrepancies in ESG ratings between Korean and global rating agencies. The first hypothesis concerns the correlation between Korean and global agencies’ ESG ratings. Data revealed a lower correlation between these agencies’ ratings compared to correlations within Korean or global agencies, a trend that was statistically significant during certain periods. Over time, the divergence between Korean and global ESG ratings has reduced, yet distinct differences remain, highlighting that specific factors and methodologies persistently affect the agencies’ ratings. The second hypothesis postulated that sectoral classifications significantly influence the disparities between Korean and global ESG ratings. Empirical findings confirmed this, emphasizing that sectoral variances exerted a greater influence on ESG rating discrepancies than several financial factors. Particularly, sub-industries as categorized by the Global Industry Classification Standard (GICS) exhibited notable differences. The findings emphasize the necessity of factoring in industrial nuances during ESG assessments, presenting practical for investors and corporations.