The availability of industry-unadjusted granular data is also very important.
With industry adjustment, a heavily-polluting firm can be classified as green if it pollutes less than other firms in its heavily-polluting industry.
Check with your data provider where does industry adjustment take place.
For many applications of ESG data, one should be usingindustry-unadjusted metrics.
Author: Prof. Dr. Kornelia Fabisik
Assistant Professor of Finance at the University of Bern // I do research in empirical corporate finance, corporate governance, ESG and sustainable finance. I am a recipient of the 2021 Lamfalussy Research Fellowship from the European Central Bank (ECB) as well as a Research Affiliate at the Centre for Economic Policy Research (CEPR). I worked as an Assistant Professor of Finance at the Frankfurt School of Finance & Management from August 2020 to July 2022 and in August 2022, I joined the University of Bern.
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