MIT Sloan Sustainability Initiative

The Aggregate Confusion Project

Capital markets are moving fast to incorporate Environmental, Social, and Governance factors.

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The problem? ESG data are noisy and unreliable.

We found the correlation among prominent agencies’ ESG ratings was on average 0.54; by comparison, credit ratings from Moody’s and Standard & Poor’s are correlated at 0.92. This ambiguity around ESG ratings creates acute challenges for investors trying to achieve both financial and social return. 

With our five member companies, the Sustainability Initiative is working to solve this problem through a program of research to improve the quality of ESG measurement and decision making in the financial sector.

We've begun to examine these problems, and potential solutions, in our ongoing suite of research:

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Aggregate Confusion Project Scope

Together, we are ready to chart a new course towards more rigorous and coherent methods for ESG integration.  Each member organization will have slightly different business objectives, internal capabilities for ESG research, and priorities among ESG issue areas; but broadly we understand there to be a few tasks common to all:

  • Reduce the level of noise in measuring specific ESG categories such as labor treatment, carbon emissions, and product safety;

  • Understand the effect of ESG-driven investment flows on stock price and firm behavior;

  • Develop smarter ways to aggregate ESG factors into composite indices; 

  • Reliably assess investor preferences to enable ESG indices to be more customized and attuned to investors’ values.

Building a sustainable investment capability inside your firm is a process of engaging people and building their skills and knowledge. Our intention is that our members will have access to top researchers, and the opportunity to engage with our entire team and suite of activities to build their firm’s capacity.

MIT Sloan Sustainability Initiative

Carbon Confusion

A suite of research within the ACP, we are probing fundamental questions around scalability, additionality, asset pricing, and the evolving regulatory environment of carbon markets.

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Leadership Team

Florian Berg

Florian Berg

Co-Founder, Research Scientist

Research Scientist, MIT Sloan School of Management

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Jason Jay

Jason Jay

Co-Founder

Senior Lecturer, Director, MIT Sloan Sustainability Initiative, PhD '05

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Julian Kölbel

Julian Kölbel

Co-Founder, Research Affiliate

Assistant Professor for Sustainable Finance, University of St. Gallen

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Roberto Rigobon

Roberto Rigobon

Economics, Finance and Accounting

Society of Sloan Fellows Professor of Management

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Researchers

Florian Heeb

Florian Heeb

Postdoctoral Associate

Postdoctoral Researcher, MIT Sloan School of Management

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Aneil Tripathy

Aneil Tripathy

MCSC Impact Fellow

Impact Fellow at MIT Climate & Sustainability Consortium (MCSC)

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Esther Kohler

Esther Kohler

Postdoctoral Associate

Postdoctoral Researcher, MIT Sloan School of Management

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Lajos Kossuth

Lajos Kossuth

Postdoctoral Associate

Postdoctoral Researcher, MIT Sloan School of Management

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Isabella Loaiza

Isabella Loaiza

Postdoctoral Associate

Postdoctoral Researcher, MIT Sloan School of Management

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Jitendra Aswani

Jitendra Aswani

Postdoctoral Associate

Postdoctoral Researcher, MIT Sloan School of Management

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