The Incoherence of ESG Ratings

Greenwashing is when companies say they're pursuing environmental goals and then choose the rating system that'll give them approval. When ESG goals are voluntary, they don't have a lot of obvious evidence that there's a big economic cost to doing so. But once it moves from being optional where you can basically gerrymander your review system to required, then we do start seeing substantial negative economic impact on firm's profitability return for shareholders.