Measuring Companies’ Environmental and Social Impacts: An analysis of ESG Ratings and SDG Scores

Jan Anton van Zanten

doi:10.1177/10860266251326895

Measuring Companies’ Environmental and Social Impacts: An analysis of ESG Ratings and SDG Scores

Jan Anton van Zanten^*

^*Corresponding author for this work

Department of Business-Society Management

Research output: Contribution to journal › Article › Academic › peer-review

27 Citations (Scopus)

213 Downloads (Pure)

Abstract

Environmental, social, and governance (ESG) ratings are central to sustainable investing and research but face criticism for inaccurately reflecting corporate sustainability performance. In response, new metrics have emerged that assess companies’ impacts on the Sustainable Development Goals (SDGs). This article compares four ESG ratings with two SDG scores, revealing no correlation between them. It then evaluates the alignment between these sustainability ratings and how investors and regulators assess corporate (un)sustainability. The findings show that SDG scores capture how these stakeholders judge companies’ negative and positive impacts on sustainable development, while ESG ratings do not. This implies that SDG scores have high, and ESG ratings low, construct validity for assessing corporate sustainability performance. These results underscore that concepts like ESG, corporate sustainability, and company impact can be used complementarily but not interchangeably. The practical implication is that sustainable investors should prioritize sustainable development impacts next to avoiding ESG risks.

Original language	English
Pages (from-to)	403-439
Number of pages	37
Journal	Organization and Environment
Volume	38
Issue number	3
Early online date	4 Apr 2025
DOIs	https://doi.org/10.1177/10860266251326895
Publication status	Published - Sept 2025

Bibliographical note

Publisher Copyright:
© The Author(s) 2025. This article is distributed under the terms of the Creative Commons Attribution 4.0 License (https://creativecommons.org/licenses/by/4.0/) which permits any use, reproduction and distribution of the work without further permission provided the original work is attributed as specified on the SAGE and Open Access page (https://us.sagepub.com/en-us/nam/open-access-at-sage).

UN SDGs

This output contributes to the following UN Sustainable Development Goals (SDGs)

SDG 12 Responsible Consumption and Production

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Measuring Companies Environmental and Social Impacts An analysis of ESG Ratings and SDG ScoresFinal published version, 1.5 MBLicence: CC BY

Cite this

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abstract = "Environmental, social, and governance (ESG) ratings are central to sustainable investing and research but face criticism for inaccurately reflecting corporate sustainability performance. In response, new metrics have emerged that assess companies{\textquoteright} impacts on the Sustainable Development Goals (SDGs). This article compares four ESG ratings with two SDG scores, revealing no correlation between them. It then evaluates the alignment between these sustainability ratings and how investors and regulators assess corporate (un)sustainability. The findings show that SDG scores capture how these stakeholders judge companies{\textquoteright} negative and positive impacts on sustainable development, while ESG ratings do not. This implies that SDG scores have high, and ESG ratings low, construct validity for assessing corporate sustainability performance. These results underscore that concepts like ESG, corporate sustainability, and company impact can be used complementarily but not interchangeably. The practical implication is that sustainable investors should prioritize sustainable development impacts next to avoiding ESG risks.",

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Measuring Companies’ Environmental and Social Impacts: An analysis of ESG Ratings and SDG Scores

Abstract

Bibliographical note

UN SDGs

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