It is becoming more evident that many so called environmental, social, and governance funds and the companies they invest in really aren’t that socially responsible at all. With $2.8 trillion in global sustainable fund assets, ESG investing is big business and authorities around the world are increasing their pressure on claims that turn out to be “greenwashing” – fund managers claiming their investments are more sustainable than they are. The UN Sustainable Development Goals can be used in helping define ESG.
Goldman Sachs, Deutsche Bank and others have been accused of prospectus fraud. The problem is that there is no solid, regulated definition of ESG and marketing agencies love to use the term as a branding tool. How can we put a definition to ESG that gives investors comfort in knowing that the companies they are investing in are improving their sustainability and equity?
Using the United Nations Sustainable Development Goals (SDGs) as a measurement tool is a great start. The UN SDGs are global goals set out by the United Nations, whereas ESG is an arbitrary rating system used by companies to measure their environmental and social credentials. The SDGs offer a realistic framework for ESG mapping at a higher level and can help to increase the adoption of sustainable investing, encourage responsible corporate behavior, and integrate sector and business specific ESG factors with broader social issues and global environmental goals.
Join the Movement in helping define ESG, FundingHope.
Up next, we’ll take a closer look at what the SDGs are…