In our latest podcast, Harvard Business Review editor Adi Ignatius discusses Environmental, Social, and Governance criteria, a.k.a. ESG, the new wave in responsible investing. ESG criteria range from working conditions, to board member diversity, to carbon emissions. Yet it can be subjective and difficult to quantify. Could it be just another tool for greenwash?
- Before my host Jared Downing’s talk with Adi Ignatius, he discusses a new study that has ruled out both the best and worse climate change outcomes. If we maintain the current rate of emissions, the world will get hotter. We don’t know exactly how much hotter, but scientists have recently narrowed the range. Now the worst case scenario is slightly lower. But the best case scenario is above 2 C, meaning we have no choice but to drastically reduce emissions to meet the target of the Paris Agreement.
- After that, Jared opens the discussion with Adi Ignatius about ESG rankings. He explains why the Harvard Business Review integrated ESG into its list of top 100 CEOs and the strengths and weaknesses of the criteria. Pro: ESG are more comprehensive than something like CSR, judging companies by a broader and more holistic set of factors. Con: ESG still lacks transparency and is hard to quantify, and it might be easy for companies to game the system.
- Finally, Jared does a little ESG research of his own, looking into a few ESG rankers that offer their findings for free online.