Dear MEL Topic Readers,
How 'ESG' came to mean everything and nothing
Back in 2015, 196 nations pledged to take on climate change with the
goal of net zero emissions by 2050 at the UN's annual Climate Change Conference
(COP21) in Paris. This led many businesses to add a new perspective on business
strategies and investments, called ESG (Environment, Social, and Governance) a
framework used to assess an organization's business practices and performance
on various sustainability and ethical issues. Some global companies like Axa, Apple,
Pfizer, and Proctor & Gamble committed greener or fairer business
commitments. However, ESG seems to consist of controversial elements.
Environmental and social pledges are for outside of the company while governance
is the way that organizations are managed at the highest level, and the systems
for doing this. For example, environmentally, the sooner the better to shift from
fossil fuel vehicles to new energy vehicles. However, what happens to the cars and
gas stations on the roads? That’s a social issue. From the corporate governance
aspects, a radical shift to new energy vehicles would affect the bottom line of
existing car makers and their suppliers, which is a governance issue. Can corporations
and financial institutions keep investing in businesses or projects whose expected
returns are lower just under the name of ESG? After all, ESG seems to be a nice
label to put on for environmentally and socially responsible corporations that
maintain responsible governance.
Read the article and learn about what ESG has meant to the world.
https://www.bbc.com/worklife/article/20231114-how-esg-came-to-mean-everything-and-nothing
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