Spring 2020 Issue
unformed, and that has much to do with the format of ESG data. “The biggest obstacle to investment,” said Robert Eccles and Svetlana Klimenko in a recent HBR article, “is that most sustainability reporting by companies is aimed not at investors but at other stakeholders, such as NGOs, and is thus of little use to investors.” (The Investor Revolution, Harvard Business Review, 2019). They also point out that regulators rarely stipulate standards of disclosure and most companies avoid the scrutiny of third-party data auditing or assurance. Most investors say that ESG performance increases their trust in a company (2019 Edelman Trust Barometer Special Report: Institutional Investors), even if they may harbour doubts about ESG as an enduring market trend. Progressive firm Generation Investment Management said in a white paper last year that current ESG metrics are “imperfect proxies” and in dire need of third-party verification. ESG could tip over into common practice — standards will emerge, stakeholders will engage, and meaningful capital will flow — or it could become contaminated with misinformation, misuse, and mistrust. Given the crises we face, it isn’t certain that we have the time to correct this scenario. “No society has ever known enough about its actions to have developed immunity to its new extensions or technologies,” wrote McLuhan in the same book. Do we now know enough to create a cure…? i
ABOUT THE AUTHOR Evan Harvey is the Director of Corporate Responsibility for Nasdaq. He also serves on the Board of Directors for the UNGC US Network and chairs the Sustainability Working Group at the World Federation of Exchanges.
Author: Evan Harvey
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