Your company could already have an environmental, social and governance (ESG) rating, even if it has never requested one.
Investors and creditors may use ESG ratings as part of their assessments, while customers and procurement teams can request ratings or broader sustainability information when evaluating suppliers.
For businesses, this raises an important question: do you know which ESG assessments matter to your stakeholders and what information they rely on?
These questions are examined in Navigating ESG Ratings: Global and GCC Perspectives, a research report jointly developed by DMCC and Finvizier Consultancies FZCO. Drawing on global rating methodologies and insights from UAE companies, the report examines how ESG ratings are used, why they differ and what businesses should understand about them.
What is an ESG rating?
An ESG rating is a provider's assessment or opinion of a company's environmental, social and governance characteristics, risks or impacts, based on a defined methodology.
Depending on the provider, an assessment may examine emissions, labour practices, supply-chain management, business ethics, corporate governance and other factors relevant to the company or its industry.
However, ESG ratings are not all designed to answer the same question. Some focus on sustainability-related financial risks to a company, while others consider its impacts on people and the environment.
An ESG rating is therefore not a certification of overall sustainability performance. Understanding what it measures, and how the provider reaches its conclusions, is essential when interpreting the result.
How ESG ratings influence investment and financing decisions
ESG ratings are used throughout the investment process, including company screening, portfolio monitoring and the construction of certain investment indices.
For example, the MSCI Universal Indexes use companies' ESG ratings and rating trends when determining how securities are weighted within the indices. While a favourable rating does not guarantee investment, understanding these criteria can help businesses see how ESG assessments feature in certain investment strategies.
Creditors may also consider ESG information alongside financial and operational data as part of their assessment processes.
In certain sustainability-linked financing arrangements, ESG ratings or related performance measures may be incorporated into the financing terms.
These applications vary between financial institutions and transactions. A stronger ESG rating does not automatically mean better financing terms, but knowing what information lenders require can help businesses prepare for their assessments.
Why ESG ratings also matter to customers and supply chains
For businesses operating across international markets, ESG expectations can extend beyond investors and lenders.
Customers and procurement teams may use ESG ratings or request sustainability-related information during supplier qualification, due diligence or ongoing assessments.
The distinction matters. Some organisations require a specific third-party assessment, while others request company policies, operational data or supporting documentation. Understanding the requirement can help businesses focus on the right information.
Research jointly developed by DMCC and Finvizier highlights this commercial dimension.
Interviews with rated UAE companies highlighted customer, procurement and supply-chain expectations, alongside investor, financing and market-access considerations, as reasons for engaging with ESG ratings. These qualitative insights reflect the participating companies' experiences and should not be read as representative of all UAE or GCC businesses.
For businesses, the practical starting point is to identify which ESG information their customers, investors and creditors require, rather than treating every ESG assessment as equally relevant.
What ESG ratings can reveal about your business
The value of understanding ESG ratings is not limited to external assessments.
Companies can also use ratings to benchmark certain ESG practices against industry peers, review relevant risks and identify gaps in their information or internal processes.
One senior sustainability strategy representative from the banking sector, interviewed for the DMCC and Finvizier report, highlighted the importance of making supporting information accessible:
“Once you understand the methodology, you realise that certain policies, disclosures and supporting evidence are expected to be clearly available.”
Senior Management Representative, Sustainability Strategy, banking sector
The representative described how the company brought relevant policies and supporting documents together on a dedicated disclosure page, with summaries and clear links.
The example highlights an important distinction: strong ESG practices may not be fully reflected in an assessment if the supporting information is difficult to find or verify. Gaps in disclosure can influence how a rating provider evaluates a company, even where relevant policies or processes are already in place.
Three questions businesses should ask
Understanding ESG ratings does not mean every company needs to pursue every available assessment. A more useful approach begins with identifying the requirements that matter to the business.
1. Which ESG ratings are relevant to our stakeholders?
Identify whether key investors, creditors or customers use particular rating providers or assessment criteria.
2. Are we being asked for a rating or supporting ESG information?
Clarify whether the requirement involves a third-party assessment, questionnaire, policy, disclosure or operational dataset.
3. Can we support the information being assessed?
Review where relevant ESG information is held, whether supporting evidence is available and who is responsible for maintaining it.
Understanding ESG ratings in the GCC
For businesses operating across the GCC, interpreting ESG ratings also requires an understanding of how global methodologies account for different regional and operating conditions.
The DMCC–Finvizier report examines 11 global ESG rating providers and initiatives, alongside insights from rated UAE companies and questionnaire input from international rating providers. It also sets out practical recommendations to help businesses understand and prepare for ESG assessments.
The research is an initiative of the DMCC Sustainability Hub, which provides sustainability-related learning resources and access to partner services for eligible member companies.
FAQs on ESG ratings
