ESG ratings don t mean what you think
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Loose framework for granting high ESG ratings creates false impression
published : 26 Dec 2020 at 04:04 PTTEP s Bongkot offshore gas block in the Gulf of Thailand.
Environmental, social and governance (ESG) ratings and sustainability stock indices based on ESG scoring have become the hot new trend among retail and institutional investors, allowing them to evaluate companies based on sustainability and social development instead of simply profits and losses. ESG funds promise long-term growth as governments around the globe promise to scale down emissions to combat climate change.
But in practice, the loose framework for granting high ESG ratings has allowed companies with holistically negative impacts on the environment to populate domestic and global sustainability indices and funds, while expanding production of not-so-sustainable activities such as coal mining, offshore oil drillin
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