ESG rankings, greenwashing and the need for competent managers

摘要

THE NEED FOR TRANSPARENT and standardised information around companies' sustainability profile, performance and risk exposure is a major challenge for the scaling up of sustainable investments. This has led to the creation of sustainability and environmental, social and governance (ESG) indices, which have, in turn, gained considerable importance in the market - even during the Covid-19 pandemic - moving from the niche to the mainstream. Measuring a firm's sustainability is not a straightforward task. It comprises dimensions such as environmental impact, social engagement and good governance. Challenges in assessing these dimensions have deeper repercussions on the real economy, as millions in savings can be misdirected in the investment industry. The term 'ESG' was officially introduced in 2004 by the UN Global Compact Initiative in its 'Who cares wins' report. In the past decade, growing concerns about global warming and the implications of the 2008 financial crisis have led to a significant increase in investor preferences for sustainable investment. ESG-related investment products have seen a significant increase in volume and are no longer a niche investment practice today. This market segment is likely to continue increasing, yet in a more orderly way, in the light of regulations, such as the European Commission's EU sustainable finance agenda, the 'Next Generation EU' plan, and the EU Recovery and Resilience Facility, with at least 37% of funds dedicated to the transition to a greener economy.