Consolidation of the ESG Rating Industry as Enactment of Institutional Retrogression

The socially responsible investing (SRI) movement has been following the aim of creating lasting institutional change by infusing the investment sector with new norms and values. Environmental, Social and Governance (ESG) rating agencies have emerged in response to the needs of SRI actors for reliable data on the social performance of firms. Since 2005, the industry of ESG ratings has witnessed a number of national and cross-border consolidations. Based on a set of 37 interviews and secondary data, the paper explores the driving forces behind this consolidation as well as its impact. Our focus is on four ESG rating agencies based in the United States, the United Kingdom, France and Switzerland. We conclude that in effect consolidation has at least partially resulted in institutional retrogression whereby the traditional norms and values have reaffirmed their primacy thereby somewhat negating the institutional change sought-after by the SRI movement