ESG: Why Does It Matter?

ESG Has Started To Have A Meaningful Impact On The Way Business Is Done

Although some companies may consider it a tedious task of box-checking, ESG (an acronym for environmental, social and governance coined in 2005) has started to have a meaningful impact on how business is done.

The criticism of ESG is well known. After all, businesses exist to make money within the limits of the law, not to promote social values. To the extent a company does promote social values, this may be seen as part of its corporate brand but not meaningful to the fundamental way it operates. Hence, research has noted the absence of correlation between profitability and ESG performance. A company may be good at ESG and bad at business, or vice versa.