Do You Know Your ESG Score?

5 minutes02/24/2025

Sustainability is increasingly important for businesses and makes them more attractive to potential investors. However, simply having an Environmental, Social, and Governance (ESG) program and publishing an annual report isn’t enough to stand out. Investors need more than a summary of your initiatives — they want to see real progress over time in managing risks and reducing your impact. 

With hundreds of companies to compare and contrast, ESG scores offer investors an easy, objective way to evaluate your performance. But how is your score determined, and what constitutes a good score? 

Let’s break it down. 

What Are ESG Scores?

An ESG score condenses complex data into a single figure, making it easier for investors to compare risk across companies or investment portfolios. These scores are determined by third-party investment research firms, offering an impartial view of a company’s operations, risk management, and progress in ESG areas.

While the goal is to maintain neutrality and objectivity, ESG scores have been criticized for lacking a standardized way of assigning points, which can make it unclear as to how they’re calculated.

How Are ESG Scores Calculated?

ESG scores assess performance and risk based on a range of metrics, which can vary by company and industry. The organization doing the rating may weigh certain factors more heavily depending on the business type.

For example, a manufacturing company’s ESG score might focus on water usage and energy conservation, while a real estate investment firm might prioritize transparency in leadership and community engagement. This tailored approach ensures that the score reflects the company’s unique risks and operations, promoting meaningful, industry-specific progress.

An important factor in ESG scoring is how companies manage risk. For instance, a company working with hazardous chemicals might receive a higher ESG score if it has a strong environmental and safety record. On the other hand, a business with minimal risk but little effort to reduce carbon emissions could receive a lower score.

Sometimes, the rating organization may prioritize certain ESG issues over others, like biodiversity or human rights, based on their own values.

What Is a Good ESG Score?

A good ESG score reflects minimal risk. Different rating agencies may use different systems to assess and communicate ESG scores.

For example, Morningstar uses a numerical scale from 0 to 100, where:

• 0 to 10 indicates negligible risk
• 30 to 40 represents high risk

Other rating agencies may use letter grades:

• AAA and AA: Industry leaders that exceed expectations in managing ESG risks.
• A, BBB, BB: Companies with a mixed or average track record in ESG.
• B and CCC: Companies with significant ESG risks and a poor track record.

The lower the ESG risk, the more attractive a company is to investors, although the score is just one part of the larger investment decision process. Investors weighing the ESG risks against financial potential will consider these scores to help guide their choices.

Improving Your ESG Score

To improve your ESG score, the first step is to have a robust and well-documented ESG program in place. It’s not enough to just make sustainability claims — you need to show tangible progress in reducing your impact and managing risks over time.  

This is where the AMCS ESG Solution (formerly Quentic) comes in. It allows companies to track their ESG performance and document their progress in real-time, helping them improve their score and attract investment. 

Ready to improve your ESG score? Reach out to one of our experts today to learn how AMCS can help you meet your goals and appeal to socially responsible investors. 

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Quentic is now part of the AMCS Group. Learn more here.