ESG ratings: the small and mid-cap conundrum - Berenberg

Berenberg analysed the approaches of three major ESG rating providers, gave an overview of small and mid-cap companies’ views on ESG rating services and discussed two case studies on how Berenberg addresses such issues.

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As small and mid-cap equity specialists, Berenberg often finds that small and medium sized companies are either not rated or are rated worse than large companies. Through Berenberg’s analysis, it emerged that small cap companies often perform very well in terms of ESG criteria due to their high-quality business models that experience strong structural growth and sustainable management.

However these businesses face many issues when disclosing the required information, as well as ESG ratings providers having such distinct approaches when capturing the ESG credentials of a company.

Berenberg conducted a survey amongst a select group of small and mid cap companies to gather their views on why such discrepancies may occur. The report concludes with how Berenberg addresses these issues through the discussion of two case studies.

Originally published May 2020

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