Rate the Raters 2023TheSustainAbilityInstituteFactsheetbyERMThis report is based on analysis of survey responses from a broad range of corporatesustainability professionals and investors;survey data are supplemented by in-depthinterviews and secondary research.The findings reveal an ongoing evolution in theESG ratings space,with the landscape becoming more complex at the same time asratings become more important to investors and corporations.But many of the painpoints past Rate the Raters research revealed remain the same.ESG ratings and dataare essential to the sustainable finance ecosystem and their use is increasing,but ESGratings providers still fall short of meeting all stakeholders'needs.Please click over to the full Rate the Raters 2023 for analysis and context.First Look:Survey Highlights*CDP,S&P Global ESG,Investors and Corporates mostly agreeon the best ESG rating providers:CDPISS-ESG,and Sustainalyticsand S&P Global ESG are both at the topare ranked the highest byof the list.both investors andCDP earns the highest position,asit did during previous Rate the Raterscorporate respondents.survey cycles.Investors are increasingly◆In 2018/19,12 percent of investorrespondents ranked requirements torequired to integrate ESGintegrate ESG ratings and data intoratings and data intotheir investment practices among theirtop three priority reasons for using ESGinvestment strategies.rating providers.In 2022,43 percent of respondentsranked requirements to integrate ESGratings and data into their investmentpractices among their top three reasonsfor using ESG rating providers.*104 corporate and 33 investors were surveyed between September and November of 2022.For fullmethodology ansurvey questions see Appendix I.March 2023Page 1 of 4Rate the Raters 2023FactsheetBoth Investors andWhen asked to rate their level ofoverall trust in ESG ratings providers toCorporates Have Onlyaccurately judge corporate sustainabilityModerate Trust in ESGperformance on a scale of 1 to 5",52 percent of corporates and 59 percentRatings Providers.of investors responded with a "3,"indicating moderate trust.Investor respondents rated their level ofoverall trust in ESG ratings providers as3.31 out of 5 on average.Corporate respondents rated their level ofoverall trust in ESG ratings providers as2.9 out of 5 on average.ESG raters that require◆Corporate respondents ranked activerating providers CDP and S&P Global ESGactive participation fromfirst and second,respectively,in averagecorporations are rankedquality and usefulness.higher than others.Active providers'average score wasapproximately 0.5 points higher inquality and usefulness(3.71 and 3.56,respectively)compared to passive ratings(3.14 and 3.06,respectively).Corporations recognizeOver 50 percent of surveyed companiesengage to some degree with at leastboth benefit and cost ofsix ratings providers,but intervieweesengagement withindicated that they are prioritizingengagement and responding to fewerESG raters.providers overall.Investor demand drives57 percent of corporate respondentslisted investor demand as theircorporate engagementtop motivation.with ESG raters.82 percent of corporate respondentslisted investor demand among theirtop three reasons for engaging with ESGraters.The survey asked all respondents to indicate their overall trust in ESG ratings providers on a scale of 1 to 5,where 1 is "very low,"3 is "moderate,"and 5 is"very high."For full methodology and analytical approach,seeAppendix 1.March 2023Page 2 of 4