In contrast to SDG-aligned investing, recent years have seen a surge in environmental, social and governance (ESG)-based investment. Our work makes clear that while ESG assessments can be a useful tool for investors to consider issues of materiality for consideration in investment decision-making, ESG is not, and is not intended to be, a holistic measurement of a company’s impact on people and planet. Indeed, corresponding with the surge in ESG investing has been a worsening of relevant social and environmental conditions, many of which are created or exacerbated by the very companies held in ESG funds.
In light of this disparity, it is valuable to clearly understand what ESG does, and does not, accomplish with respect to promoting--and assessing--alignment of companies with sustainable development objectives and outcomes.
