Fixing the Flaws of Current ESG (Environment, Social, Governance) Measures. An Approach to Setting New Standards

Academic Paper from the year 2019 in the subject Business economics - Investment and Finance, grade: 1,8, School of Oriental and African Studies, University of London (SOAS), course: ESG Investing, language: English, abstract: Providing society with misleading information about corporate sustainability can affect the social legitimacy and trust of both companies and ESG rating agencies (Olmedo at al. 2019). Therefore, it is crucial to ensure that investments which are labelled as socially or ecologically responsible, are in fact socially or ecologically responsible. Without this legitimacy and trust, decreasing interest in these investments could have bad social and ecological global effects. Therefore, this essay dismantles the weak spots of current “green” metrics and indices to create a foundation for better, more transparent measurements and indices. The research question is: what are the current deficiencies of common metrics and indices and how can one improve them?