Analysis of the Impact of Environmental, Social, Governance Rating Disagreements on Corporate Green Loans

Abstract

At present, the divergence of Environmental, Social,Governance (ESG) ratings stems from the differences in methodology and data sources of various institutions, which is becoming a research hotspot in the intersection of corporate finance and sustainable finance. The causes and economic consequences of ESG rating divergence are increasing concern at home and abroad, and significant rating differences cause significant obstacles to the process of capital allocation. This paper mainly studies how ESG rating disagreement affects the risk judgment and loan decision of enterprises applying for green credit. Due to the divergent ratings of different financial institutions on the ESG performance of the same enterprise, banks devote more resources to verification, raising the audit cost. At the same time, the rating divergence exposes the credibility problem of ESG information of enterprises, and the poor information and uncertainty make the risk control of green credit more difficult. The degree of ESG rating disagreement is significantly negatively correlated with the scale of green credit obtained by enterprises and the interest rate discount margin. In view of the above core problems, this paper proposes that unifying ESG rating standards and improving the transparency of information disclosure of enterprises can promote the efficiency of corporate green credit and reduce risks.