The glossary provides more information on some of the key terms we use on MyFairMoney. It also describes criteria, methods and data sources in more detail. This will help you dive deeper into the topic of sustainable investment!
Companies are rated by external agencies for their environmental, social and governance (ESG) efforts. This rating is then summarised in a number, letter or symbol. Ratings are intended to help compare funds and companies with each other. Depending on the rating, fund providers can apply for a rating or are rated on the agency's initiative. Ratings usually work with single indicators.
ESG ratings are produced, for example, by ISS ESG, MSCI or Reuters agencies. Their rating for the same product can be very different. This phenomenon has also been described scientifically a number of times, for example by Dimson, Marsh and Staunton (2020) or Berg, Kölbel and Rigobon (2020). The reasons for the divergence are different methods, focus, and data generation. None of these assessments can be used to directly infer the sustainability impact of the fund.