ESG is neither 'woke capitalism' nor the same as sustainability

The ratings and indices used by investors to identify ESG stocks are not designed to measure an organization’s positive impact on society and the planet. But rather they assess the potential impact the world has on a company’s value and its shareholders, writes Julia Binder. Surely even Milton Friedman would have approved?

Almost every company has by now adopted some core ESG principles, which means that they consider, measure, and report the environmental, social, and governance aspects of their business alongside financial considerations. In fact, ESG has become so omnipresent that many companies use the term to cover all their sustainability-related activities. Yet while it has become common practice to use the terms interchangeably, there are some good reasons to distinguish between ESG and sustainability. Have you ever wondered why ESG has conquered the business world at the speed of light? A key reason can be seen in the emergence of investors in the sustainability community. Investors now increasingly consider a company’s ESG characteristics, alongside its financial attributes, when deciding whether or not to invest in it. So, ESG is first and…

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I by IMD (Digital) - 1 Issue, 09. March 2023

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