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Major corporations are investing in sustainability.
More Chief Sustainability Officers are hired daily, and it is increasingly common to read about corporate sustainability claims in the news.
On the surface, the motivations appear to be altruistic, and in some cases, it likely is. There are two issues here that are rarely talked about.
First, when you dig into the motivating factors, research has proven several correlations between a company’s ESG (Environmental, Social, and Governance) rating and its financial performance if they are publicly traded.
Investment firms are increasingly more likely to invest in corporations with solid ESG ratings.
The funds allocated to these organizations that score positively have been rising.
There are now also several ESG index funds that are available for trading.
This begs the question, what motivates corporations to invest in ESG?
Another issue is how these ESG ratings are derived. This is also becoming big business.
Over six hundred ESG rating agencies exist globally at the moment. Each of these agencies evaluates different sets of criteria and assigns scores or ranks in differing fashions.
