Issue 3: Lemons in ESG

Singapore

ESG’s lemon threat

Climate reporting is a mess at the moment. Here’s a nice dive into disclosures by Singapore’s blue-chip index stocks that found – surprise! – significant inconsistencies in the way greenhouse gas emissions are reported.

The sustainability and ESG market are starting to come up against a lemon problem. The classic illustration of this is the market for used cars, where potential buyers can’t discern the lousy lemons from the good ones. Buyers therefore demand a discount on all cars, which puts off sellers of good cars and eventually creates a market of only lousy cars.