Two accounting professors earn recognition for ESG research
SMU accounting professors have achieved global recognition for their impactful research on Environmental, Social, and Governance (ESG) practices. Their work highlights the critical role of robust ESG frameworks in driving corporate accountability and sustainable growth. These accolades underscore SMU’s leadership in advancing meaningful research that addresses today’s most pressing societal and corporate challenges.
Professor Liandong Zhang’s and Associate Professor Yun Lou’s research on ESG ratings received an Honourable Mention at the 2024 Moskowitz Prize, the premier global award in sustainable finance research.
Their study, “Do Commercial Ties Influence ESG Ratings? Evidence from Moody’s and S&P”, stands out for its rigorous empirical methods and its transformative potential to reshape real-world business and investment practices.
As part of their research, they analysed over 25,000 ESG ratings to uncover how commercial ties between ESG-rating agencies and rated firms can lead to inflated ESG scoring.
This bias undermines the credibility of ESG ratings, which are meant to be a key tool in steering capital towards genuinely sustainable practices.
These findings have already been referenced in regulatory proposals within the European Union, which is testament to just how imperative and relevant these results are to policy makers. They carry significant implications for regulators, investors, as well as the broader financial ecosystem, highlighting an urgent need for more transparency, robust regulation and stakeholder vigilance in order the maintain the integrity of ESG ratings.
Professor Liandong Zhang remarked, “This recognition reflects SMU’s dedication to impactful research that bridges academic inquiry with pressing global challenges. Our rigorous approach ensures that our findings are both robust and actionable.”
Associate Professor Yun Lou added, “Addressing conflicts of interest in ESG ratings is critical to fostering genuine sustainable investment and building trust in financial markets. Our work underscores the importance of aligning financial practices with long-term sustainability goals.”
The 2024 Moskowitz Prize, awarded by Northwestern University, celebrates research that demonstrates both empirical excellence and the potential to inform responsible business and investment practices. This year’s Honourable Mention underscores SMU’s leadership in advancing sustainable finance and influencing global conversations on sustainability; and has been featured in global media, including on Northwestern University’s Kellogg School of Management blog, further amplifying the study’s impact on academia and industry alike.
