ValueCo's paper on Bias assessment and mitigation for ESG scoring models Investigates how to assess and quantify bias when constructing environmental, social and governance (ESG) ratings.
The paper caught the judges' attention for attempting to address the challenge of a lack of standardized ESG rating assessments.
This makes comparability an issue and methodologies must be assessed at the individual rating level to understand their relative value. Such variability can leave ESG ratings and impact reporting claims open to criticisms of ESG-washing.
“The bias assessment could be an entry point for the world to agree upon a standard ESG rating system that will be beneficial for all stakeholders,” said one IMPACT awards judge.
Valueco, which is an ESG benchmark platform, separated internal and external bias factors and proposed a methodology to mitigate these biases to compute an ESG score that is independent of such factors.
The model also proposes a framework to detect companies whose intrinsic performances outperform their peers independently of external biases, such as company size, activity sector, and main geographical area.
Aligning Values and Valuation for a responsible financial system. ValueCo captures the market value of sustainability.
