As an investor dedicated to sustainability, I welcome the purported demise of “ESG” (Big Read, June 7). For those genuinely interested in and investing based on principles of sustainability, it never made much sense to begin with. After going “mainstream” post the signing of the Paris climate accord in 2015, it has been twisted and misused by all concerned to suit their convenience.
While a majority of the blame for creating the hype lies with the finance industry, the financial media must also accept some responsibility. A complex topic like sustainability, with its multiple dimensions and inherent trade-offs, was reduced to a catchy acronym with little attempt made to educate or explain it to readers.
While climate change has dominated the narrative, equally critical and, arguably, more immediate environmental and social concerns such as income inequality, access to health, education and sanitation, environmental pollution, biodiversity loss and gainful employment for all have been given lip service.
I also don’t agree with the assertion that “there is no universal, objective, rigorous framework for ESG investing”. The United Nation’s Sustainable Development Goals (SDGs) and the associated targets provide a comprehensive framework against which any potential investment can be evaluated for its contribution to sustainable development.
Adopting SDGs as the principal framework for evaluation will also address the “scope creep” witnessed by ESG. We must be upfront that there are questions or investment considerations that are essentially moral (Is war bad?) or political (Are autocracies inferior to democracies?). They must be addressed on their own merit and not rolled into an acronym that was unfit for purpose to begin with.