Singapore Management University (SMU) is proud to celebrate the recognition of our faculty members, Professor Liandong Zhang and Associate Professor Yun Lou, whose research on ESG ratings received Honourable Mention at the 2024 Moskowitz Prize, the premier global award in sustainable finance research.
Their study, titled Do Commercial Ties Influence ESG Ratings? Evidence from Moody’s and S&P, stands out for its rigorous empirical methods and its transformative potential to reshape real-world business and investment practices.
By analysing over 25,000 ESG ratings, the research uncovers how commercial ties between ESG-rating agencies and rated firms can lead to inflated ESG scores. Such bias, the study reveals, undermines the credibility of ESG ratings—key tools for steering capital towards genuinely sustainable practices.
The findings, which have already been referenced in regulatory proposals within the European Union, carry significant implications for regulators, investors, and the broader financial ecosystem. They highlight the urgent need for transparency, robust regulation, and stakeholder vigilance to maintain the integrity of ESG ratings.
Professor Liandong Zhang remarked, “This recognition reflects SMU’s dedication to impactful research that bridges academic inquiry with pressing global challenges. Our rigorous approach ensures that our findings are both robust and actionable.” Associate Professor Yun Lou added, “Addressing conflicts of interest in ESG ratings is critical to fostering genuine sustainable investment and building trust in financial markets. Our work underscores the importance of aligning financial practices with long-term sustainability goals.”
The 2024 Moskowitz Prize, awarded by Northwestern University, celebrates research that demonstrates both empirical excellence and the potential to inform responsible business and investment practices. This year’s Honourable Mention underscores SMU’s leadership in advancing sustainable finance and influencing global conversations on sustainability.
This recognition has also been featured in global media, including on Northwestern University’s Kellogg School of Management blog, further amplifying the study’s impact on academia and industry alike.
Learn more about their research and its implications for the future of ESG ratings and a summary of the paper here.