MIT Sloan Sustainability Initiative
Florian Berg
Florian Berg is a Research Scientist at the MIT Sloan School of Management, where he co-founded the Aggregate Confusion Project–a research project aimed at advancing more rigorous, coherent methods of ethical ESG integration and decision-making.
Florian's research interest covers sustainable investing with a focus on ESG ratings, the disagreement between different rating agencies, and how it affects investors, firms, as well as academic research. At MIT Sloan, he has produced multiple award-winning papers, including "Aggregate Confusion: The Divergence of ESG Ratings," which was selected as Editor's Choice by the Review of Finance. As an ESG subject matter expert, Florian is a frequent guest lecturer and presenter, having presented his research to several global business schools, asset management companies, government agencies, and academic conferences. His insights have appeared in dozens of news and media outlets, including The Economic Times, Wall Street Journal, the Financial Times, and Bloomberg.
Florian received his PhD in economics from Paris-Dauphine University. During his PhD, he held a visiting research position at ETH Zurich, and worked as a quantitative researcher at Amundi Asset Management and as a quantitative strategist/ trader at Alphadyne Asset Management.
Florian's publications
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This research examines differences between environmental, social, and governance (ESG) ratings provided by six popular ESG rating agencies. Researchers identified three main factors contributing to the rating divergence: scope, measurement, and weight. Measurement was found to be the biggest contributor, accounting for 56% of the divergence, followed by scope at 38%, and weight at 6%. The study also detected a "rater effect," where a rater's overall opinion of a company affects the rating of specific categories. The results call for greater attention to how the data underlying ESG ratings are generated.
Awards + Recognition:
- Lead article, Review of Finance
- Editor's Choice, Special Issue on Sustainable Finance, Review of Finance
- Best overall paper award GRASFI 2020
- Best paper award on ESG Standards GRASFI 2020
- Investments & Wealth Institute Governance Insight Award 2021
- Best paper award Liechtenstein Workshop of Sustainable Finance 2021
- Runner up best paper award Gronen Conference 2020
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The explosion in ESG research has led to a strong reliance on ESG rating providers. This paper documents widespread changes to past ratings from a key rating provider, Refinitiv ESG (formerly ASSET4). Depending on whether the original or rewritten data are used, ESG-based classifications of firms into ESG quantiles and tests that relate ESG scores to returns change.
Awards + Recognition:
- John L. Weinberg/IRRCi 2022 Research Paper Award
- Cornell ESG Research Conference 2022 Best Paper Award
- CFA Society Germany Investment Research Award Runner-up
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The explosion in ESG research has led to a strong reliance on ESG rating providers. This paper documents widespread changes to past ratings from a key rating provider, Refinitiv ESG (formerly ASSET4). Depending on whether the original or rewritten data are used, ESG-based classifications of firms into ESG quantiles and tests that relate ESG scores to returns change.
Awards + Recognition:
- ARCS 2022 People's Choice Award
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This study examines the impact of ESG ratings on mutual fund holdings, stock returns, corporate investment, and corporate ESG practices, using panel event studies. Researchers focused on changes in the MSCI ESG rating, which they show is the most relevant rating for the holdings of ESG mutual funds in the US.
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In “The Signal in the Noise,” researchers argue that abandoning ESG now would essentially be throwing the baby out with the bath water. ESG, however flawed, is currently the best way to measure the ethical behavior of companies and that ESG data, when deployed with greater transparency, can be an important source of information for investors.
“Given the complexity of what ESG measurement entails, we believe that the only solution to gathering, analyzing, and aggregating the data runs through commercial ESG rating agencies and ESG data providers,” write authors Florian Berg, Jason Jay, Julian Kölbel, and Roberto Rigobon.
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Researchers quantify the financial performance of environmental, social, and governance (ESG) portfolios in the U.S., Europe, and Japan, based on data from six major ESG rating agencies, and document statistically significant excess returns in ESG portfolios from 2014 to 2020 in the U.S. and Japan.
Florian's News and Media
At a glance
Florian Berg
fberg@mit.edu
Research Scientist
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Affiliate Research Project:
Subject matter:
ESG ratings, measurement, sustainable investing.