Senate Banking Committee Ranking Member Pat J. Toomey (R-PA) requested information from 12 ESG ratings firms as to how they calculate companies' ESG scores. The requests were directed at MSCI, ISS, Bloomberg, Sustainalytics, Moody's, Carbon Disclosure Project, S&P Global, FTSE Russell, RepRisk, FactSet, Refinitiv and Arabesque S-Ray.

In the letters, Senator Toomey said that ESG ratings firms "play a key role . . . by evaluating the degree to which more than 10,000 companies meet certain qualitative standards," and as a result possess the power to greatly influence capital flows to those companies. Senator Toomey requested that the 12 ESG ratings firms provide information on any non-proprietary methodologies used to assign ESG ratings including (i) the specific E, S and G factors considered and their weighting; (ii) calculations to determine the scope of industry sectors and how analysts are selected for each industry review; and (iii) reports intended to capture controversies faced by a company, including but not limited to pending litigation, negative press coverage or shareholder resolutions. Senator Toomey also posed specific questions on (i) fairness to rated companies during an assessment, (ii) determining credibility and quality of data and (iii) impact of political involvement on ratings scores.

Senator Toomey asked the companies to respond no later than October 5, 2022.


Given the inherent indeterminacy of ESG, it would not be surprising to see wide discrepancies between the methods of the firms. In the absence of transparency as to how the firms determine their ESG scores, investors who invest based on their views as to what is "right" are essentially outsourcing their moral judgements to third party providers. (See also "Your Color Red Really Could Be My Blue.")