ESG Ratings, Scope Emissions, and Corporate Creditworthiness: Insights into Rating Divergence in the U.S. and EU

Lukács, Bence and Tóth, Árpád (2025) ESG Ratings, Scope Emissions, and Corporate Creditworthiness: Insights into Rating Divergence in the U.S. and EU. ECOCYCLES, 11 (2). pp. 27-34. ISSN 2416-2140

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Abstract

This study explores the relationship between corporate credit ratings, Environmental, Social, and Governance (ESG) ratings, and Scope 1, 2, and 3 emissions for the largest 100 publicly traded companies by market capitalization in the U.S. and the EU. By integrating credit ratings from Moody’s and S&P Global, ESG ratings from Refinitiv and S&P Global, and emissions data from corporate sustainability reports, this research addresses the inconsistencies in how emissions transparency impacts creditworthiness. Employing statistical analyses such as correlation, regression, and quartile comparisons, the study provides novel insights into the weak association between ESG ratings and actual emissions performance. The findings reveal that higher credit-rated companies tend to report higher Scope 1 and 2 emissions, while ESG ratings, despite being seen as indicators of sustainability, fail to consistently reflect a company’s emissions data, particularly Scope 3 emissions. This study contributes to the literature by underlining the methodological divergences among ESG rating agencies, emphasizing their limited alignment with environmental performance metrics. Highlighting the need for a standardized ESG reporting framework, this paper calls attention to the limitations of current ESG scores as a proxy for corporate sustainability and their implications for credit rating assessments.

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