Why ESG Ratings Are All Over the Map—and What That Means for Business Owners

In theory, ESG ratings should help businesses understand how they’re performing on Environmental, Social, and Governance metrics. In practice, these ratings often raise more questions than answers—especially for privately-held companies.

Unlike credit scores, which are standardized across bureaus and based on widely accepted financial behaviors, ESG ratings vary wildly depending on who’s doing the scoring. One agency might rate a company as a leader in sustainability, while another deems it a laggard. This inconsistency is not just confusing—it’s potentially costly.

The Problem: No Universal Framework

ESG rating agencies use different models, weightings, and data sets. Some focus heavily on environmental disclosures; others emphasize corporate governance. Even among firms using similar categories, the definition of what qualifies as “good” performance differs substantially. As a result, a business may receive conflicting scores from different sources—making it difficult to act on the feedback.

For privately-held businesses, the challenges are even greater. Most ESG frameworks are designed for public companies with robust disclosures and reporting infrastructure. When these models are applied to small businesses with limited transparency, the scores often fail to reflect the real picture.

What This Means for Business Owners

Without consistency, ESG ratings become more of a narrative tool than a performance metric. This opens the door to subjective interpretation, biased comparisons, and an increased risk of greenwashing. Worse, it creates a moving target for businesses trying to secure funding or demonstrate progress.

What You Can Do:

• Pick one framework and stick to it. Whether it’s MSCI, SASB, or your lender’s preferred model, consistency matters more than chasing perfect scores across platforms.

• Focus on what you can measure. ESG should align with your operations, not overwhelm them.

• Use ESG as a lens—not a scoreboard. The goal is improvement over time, not perfection on day one.

Until ESG scoring matures into a more unified system, business owners should treat these ratings as directional rather than definitive. The smartest approach? Take what’s useful, document what you’re doing, and stay focused on building a company that’s resilient, responsible, and ready for the future.