Is Business Broken? Promises and Perils of the ESG Movement
May 2, 2024
Witold Henisz, an expert in political and social risk management from Wharton, joins Andy King, a strategist in industry self-regulation from BU Questrom, for a lively debate on the ESG movement. They discuss whether ESG can harmonize profit and planetary health, or if it's just a marketing ploy. The conversation highlights the often conflicting interests between profit motives and societal welfare, the importance of community relations in investment success, and the political backlash against ESG initiatives. Both guests emphasize the need for better regulations to enhance ESG's effectiveness.
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ESG Invests in Material Factors
- ESG investing includes financial and material environmental, social, and governance factors investors previously overlooked.
- It helps investors identify companies that will likely outperform over the medium and long term.
ESG Measures Firm Impact Poorly
- Current ESG metrics mainly assess how environmental and social factors affect firms, not firms' impacts on environment.
- ESG data aims to help investors make better financial decisions, not necessarily to improve the planet directly.
Work Hard on ESG Data
- Engage with ESG data critically and expect hard work to evaluate and apply it correctly.
- Treat investing in ESG like emerging technology: it requires diligence despite uncertainty.