Environmental, Social, and Governance (ESG) is far from straightforward

Hi All

Environmental, Social, and Governance (ESG) refers to the three central factors used in measuring the sustainability and societal impact of an investment in a business. Growing numbers of investors are incorporating ESG into their decision making process and many only invest in corporations with a favorable ESG rating. This is clearly an encouraging development for sustainability. However, measuring ESG is far from straightforward and the current methods have many critics.

Here are some stories that detail some of the concerns:

https://www.bloomberg.com/news/articles/2019-12-11/conflicting-esg-ratings-are-confusing-sustainable-investors

https://www.investors.com/politics/commentary/the-big-problem-with-environmental-social-and-governance-investment-ratings-theyre-subjective/

https://www.institutionalinvestor.com/article/b1hm5ghqtxj9s7/Where-ESG-Fails

https://www.ft.com/content/c742edfa-30be-328e-8bd2-a7f8870171e4

https://clsbluesky.law.columbia.edu/2019/06/24/sec-commissioner-peirce-talks-flaws-in-scoring-companies-on-environmental-social-and-governance-factors/

I am interested in hearing opinions about how ESG ratings can be made more meaningful and reliable.