: Sen. Pat Toomey accuses ESG ratings firms of ‘stonewalling’ Republican investigation

by | Nov 3, 2022 | Stock Market

Companies that rate publicly traded stocks based on environmental, social and governance scores will come under heightened scrutiny if Republicans are able to take over Congress in the upcoming elections. Republican Sen. Pat Toomey of Pennsylvania announced Thursday that he has requested information from 12 companies about how they calculate ESG scores, and said that six of the 12 — Arabesque S-Ray, Carbon Disclosure Project, FactSet
FDS,
+1.11%,
ISS, RepRisk, and Morningstar
MORN,
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subsidiary Sustainalytics — “have either ignored the letters or have provided incomplete responses,” according to a news release, which also accused these companies of “stonewalling” Toomey’s inquiry.

None of the six organizations responded immediately to requests for comment. These firms “play a key role in the sustainable finance industry by providing third-party data and ratings on companies to investors,” Toomey wrote in an Oct. 31 letter to the companies. “However, legitimate bipartisan concerns have also been raised regarding the veracity of third-party data, the opacity of rating methodologies, the processes by which ratings firms engage with rated entities and the management of conflicts of interest.” Toomey sent his first letters on the topic on Sept. 20, including questions related to compliance burdens on rated entities, data veracity, ratings approaches regarding controversial political issues and conflicts of interest. Toomey sent a follow up letter to th …

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