Investor Trust Has Fallen in ESG Ratings Firms
Most ESG data providers saw quality scores drop as investors increasingly rely on their own internal research.
Updated on Oct. 12, 2026 in Investing
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Investor confidence in the data quality of environmental, social, and governance (ESG) ratings providers has declined across the industry since 2023. While investors continue to use these ratings to inform portfolio decisions, they are increasingly supplementing them with proprietary analysis.
Why it matters
Investors rely on third-party ESG ratings as material inputs for investment performance, making the current decline in trust a significant issue for portfolio transparency. This shift highlights a growing demand for more reliable and consistent ESG data to support long-term investment goals.
Twelve of 13 assessed ESG ratings providers recorded a decline in perceived data quality since 2023. During this period, the top-rated provider's score fell from 4.2 to 3.5 on a five-point scale.
The players
MSCI
A global provider of investment decision support tools that offers ESG ratings and products covering climate, human rights, and biodiversity.
The details
Investors have moved to bridge gaps in third-party reporting by conducting their own proprietary analysis and engaging directly with companies. MSCI is the only firm among those studied to buck the trend, improving its standing from seventh place in 2023 to first in the latest rankings. The firm has expanded its product offerings to cover specific areas including climate, human rights, and biodiversity to better align with investor needs.
Timeline
2023 served as the baseline year for this comparative ESG ratings research.
The research findings were published in October 2026.
Money Landscape
This decline represents a sharp shift from the 2023 industry ESG ratings baseline, reflecting a broader trend of investor skepticism toward standard benchmarks. It indicates that the industry is currently undergoing a correction in how ESG data is verified and used for performance.
If you hold funds that heavily weigh ESG criteria, you should confirm if your manager supplements third-party ratings with their own direct company research. Always discuss with a qualified financial professional whether your portfolio's sustainability strategy remains aligned with your goals.
The takeaway
The decrease in trust highlights that third-party ratings are just one piece of a complex investment puzzle rather than a final word on company quality. Investors should remain diligent by reviewing fund fact sheets to understand how managers verify the ESG data they cite in their prospectuses.
Further reading
For more on evaluating investment tools, visit our Investing section.
Source note: This article includes information reported by Funds Europe.
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Do you trust ESG ratings provided by third-party firms to accurately measure company performance?
