This study examines the impact of common institutional ownership on corporate ESG rating divergence. Common institutional ownership could theoretically either reduce divergence through "synergistic governance effect" or exacerbate it via "collusive tunneling effect". Our empirical evidence from 13,112 firm-year observations of Chinese A-share listed companies demonstrates that common institutional ownership significantly decreases ESG rating divergence, supporting the "synergistic governance effect". This finding remains robust to various robustness tests. Mechanism analyses reveal that common institutional ownership mitigates ESG rating divergence through two distinct channels: strengthening ESG practices and enhancing information transparency. Cross-sectional tests further indicate that this effect is more pronounced in firms held by resistant investors, firms with superior reputational capital, and those operating in regions with stronger legal institutions. Our study provides novel evidence on the positive role of common institutional ownership in narrowing ESG rating divergences, especially in emerging market.