ESG score

    ESG Score / Rating

    ESG & Governance

    A number, usually from 0 to 100, that sums up a company's performance across a set of environmental, social and governance indicators.

    An ESG score is built by scoring many indicators, grouping them into E, S and G pillars, weighting them and adding them up. Higher usually means better. Scores from different providers use different indicators and weights, so they often disagree. SEBI treats scores as a form of ESG rating, so providers of scores on Indian securities for Indian users must also be registered.

    Why it matters

    Scores are inputs, not verdicts: the same company can rank well with one agency and poorly with another. What matters is whether the underlying factor changes cash flows or risk.

    Indian example

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