ABSTRACT
This chapter presents the main problems related to the quality of the ESG ratings and scorings. First, the main problems related to the methodology are presented, such as lack of publication methodology, information asymmetry, lack of transparency, and lack of knowledge between performance and disclosure aggregation and measurement divergence. The reasons for missing data and their sources are also distinguished. This chapter describes problems related to different reporting standards, lack of non-financial reporting, and data greenwashing. It focuses on conflicts of interest, which cause problems with rating inflation. Greenwashing data classification helps us understand this phenomenon. Finally, it is presented the methods for improving ESG ratings. A literature review of each of the mentioned phenomena is presented.
