Sustainable Investing : On the relation between sustainability rating and greenhouse gas emissions

Abstract: Sustainability and finance should go hand in hand. A financial system that supports sustainablegrowth is necessary for the transition to a carbon-free society. Environmental, Social andGovernance (ESG) is a sustainability performance measurement used worldwide. Previousresearch within the ESG area has mainly focused on ESG score and financial performance.Environmental performance gets more attention from investors, and the Nordic countries areall in the top five when it comes to sustainability ranking. This research examines the relationbetween sustainability ratings (E score and ESG score) in the Nordic countries as well as if therelation differs between different rating agencies. To study the relationships, a regressionanalysis was performed, and we could not draw any concrete conclusions whether low CO2emissions are associated with a higher E- or ESG score in the Nordic countries. The resultindicates that a high E- or ESG score does not seem to be associated with lower CO2 emissions.A significant result was found on the fact that the E- and ESG scores relation to CO2 aredifferent between rating agencies. However, full access to one of the rating agencies has notbeen granted, which entails some limitations and further research on the questions isrecommended.