Project Overview
Bilancia Consulting supported a publicly listed industrial company in diagnosing underperformance across major ESG rating agencies and executing a targeted improvement strategy. The objective was not cosmetic score inflation—but aligning disclosures, performance, and governance with how investors and rating agencies actually assess ESG risk and quality.
Within 18 months, the client achieved material upgrades across multiple ESG ratings, strengthening investor confidence and reducing the cost of capital.
The Client Challenge
Despite meaningful ESG initiatives, the company faced suboptimal ESG ratings that were negatively affecting:
- Investor access – ESG-focused funds screening out the stock
- Cost of Capital – ESG scores influencing credit perception and debt pricing
- Market perception – ESG ratings used as shorthand for sustainability performance
- Internal credibility – Sustainability teams frustrated by poor external recognition
- Competitive positioning – Lower scores than peers with comparable or weaker fundamentals
Management needed a clear, defensible strategy to improve ESG ratings without misalignment to actual business priorities.
Our Approach
We applied a ratings-first, investor-aware framework, designed around how ESG scores are actually constructed, interpreted, and used.
1. ESG Ratings Diagnostic
We analysed the client’s performance across all major ESG rating providers, identifying:
- Score drivers and penalties
- Peer-relative weaknesses
- Data gaps, outdated inputs, and factual errors
- Misalignment between company disclosures and rating methodologies
This moved the conversation from “why are we rated poorly?” to “what exactly moves the score.”
2. Gap & Root-Cause Analysis
We isolated the real reasons behind weak ratings, including:
- Missing or inaccessible public disclosures
- Performance gaps in high-weighted rating factors
- Methodology blind spots where effort did not translate into score impact
- Data inconsistencies across reports and platforms
- Legacy controversies still influencing ratings
3. Materiality vs. Rating Alignment
We assessed where rating agency priorities diverged from business materiality, enabling management to decide:
- What to fix because it matters to value creation
- What to fix because it disproportionately affects ratings
- What not to chase despite low scores
This prevented wasted effort on low-impact improvements.
4. Cost–Benefit Prioritisation
Not all ESG improvements are equal. We prioritised initiatives based on:
- Investor reliance on specific rating providers
- Time lag between action and rating impact
- Effort vs. score sensitivity
- Quick wins versus structural improvements
Improvement Strategy
We developed a phased roadmap covering:
- Disclosure optimisation – Closing data gaps that suppress scores
- Performance upgrades – Targeted improvements in climate, safety, diversity, and governance
- Rating agency engagement – Proactive clarification, evidence submission, and error correction
- Controversy management – Preventing, responding to, and neutralising rating penalties
- Investor communication – Ensuring ESG improvements translated into market perception
The strategy balanced credibility, efficiency, and score impact.
Why ESG Ratings Matter
Whether companies like it or not, ESG ratings shape outcomes:
- Capital allocation and index inclusion
- Credit risk perception and pricing
- Reputation with customers, regulators, and media
- Talent attraction and employer branding
Ignoring ESG ratings doesn’t make them irrelevant. Misunderstanding them makes them dangerous.
How Bilancia Helps
Bilancia works at the intersection of ratings methodology, investor behaviour, and real ESG performance. We help organisations:
- Diagnose ESG rating weaknesses with precision
- Focus effort where ratings and value intersect
- Improve scores without compromising integrity
- Engage rating agencies and investors effectively
- Track progress and sustain improvements over time
If ESG ratings are affecting your valuation, access to capital, or investor narrative, we help you fix the root cause, not just the score.