Report exploring how to recast ESG investing metrics

The building blocks of Environmental, Social and Governance (‘ESG’) metrics were never intended to be equal or commensurable. Good governance is a driver of positive environmental and social outcomes and impacts, rather than the impact itself. Yet the desire to create marketability for products based around ESG ratings has led to a distortion of their original purpose of raising awareness and triggering transitions towards sustainability. Of late, practitioners, academicians and civil society voices have criticized ESG metrics, questioning their purpose and legitimacy, pointing to the proliferation of frameworks and their lack of transparency, consistency, comparability or standards. Despite this, funds using ESG themes are on course to be over one third of global assets under management by 2025.

FNZ’s Dr. Vian Sharif partnered with colleagues at GIST and other leading institutions to explore the potential of using Impact Economics to create consistency in sustainability measurement.