BlueSky Thinking Summary

In the complex landscape of Environmental, Social, and Governance (ESG) ratings, Aaron Yoon's research contrasts global and local perspectives in the case of evaluating Chinese firms.

More specifically, it questions the radical differences across ESG ratings offered by global giant MSCI and Chinese rater SINO Securities.

It turns out that even with tons of resources, the expertise of SINO Securities at a local level was higher in predictive power for future adverse ESG incidents, specifically in the social and governance realms.

Yoon focuses on the cultural and contextual influences in ESG assessments, how local raters leverage deep knowledge of local laws, social norms, and the business environment to become effective at measuring issues that range from corruption to governance practices outside globally measurable metrics.

This study underlines the need for incorporating domestic insight with global standards in ESG evaluation and makes a meaningful contribution to investors who, often overwhelmed by many apparently conflicting views, have to make sense of investing sustainably.

With a global push for transparency around ESG, understanding the local lens on sustainability could very well be a way of smarter investment.