ESG Data: Biases and Limitations

April 25, 2018

Months ago, I saved an issue of Journal of Environmental Investing fully intending to read it—and after carrying it with me for more than 50,000 air miles, I eventually did. I’m glad I held on to it. With the proliferation of ESG (environmental, social, and governance) data, ratings, and indexes, it is helpful to see these metrics considered comprehensively and with some perspective, divorced from the marketing packaging that seems to drive much of the related discussion. In particular, the first section on The Ecosystem of ESG Data, with contributions by Dan Etsy and Todd Cort of Yale University, is particularly useful. This is not to suggest that we agree with all points made or even that within Aperio we all have a uniform view but rather that we found it to be a thoughtful presentation of the issues and a great starting point for further research and discussion.

No data set or rating is ever perfect nor removed from the subjectivity of the creator, but in order to make the most informed decisions about its use, it is important to understand what biases and limitations are built in. For each investor and user, what is acceptable and what isn’t will likely vary.

Send questions or comments to


© 2023 BlackRock, Inc. or its affiliates. All rights reserved. BLACKROCK and APERIO are trademarks of BlackRock, Inc. or its affiliates. Other trademarks are property of their respective owners.

This material is provided for informational purposes only and is not intended to be relied upon as a forecast, research or investment advice, and is not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investment strategy. The opinions expressed are subject to change at any time without notice. References to specific securities, asset classes and financial markets are for illustrative purposes only and are not intended to be and should not be interpreted as recommendations.

This material may contain “forward-looking” information that is not purely historical in nature. Such information may include, among other things, projections, forecasts, estimates of yields or returns, and proposed or expected portfolio composition. Moreover, any historical performance information of other investment vehicles or composite accounts managed by BlackRock, Inc. and/or its subsidiaries (together, “BlackRock”) included in this material is presented by way of example only. No representation is made that any performance presented will be achieved, or that every assumption made in achieving, calculating or presenting either the forward-looking information or the historical performance information herein has been considered or stated in preparing this material. Any changes to assumptions that may have been made in preparing this material could have a material impact on the investment returns that are presented herein by way of example. Past performance is no guarantee of future results.

The information and opinions contained in this material are derived from proprietary and nonproprietary sources deemed by BlackRock to be reliable, are not necessarily all-inclusive and are not guaranteed as to accuracy.