ESG should be boiled down to one simple measure: emissions

IF YOU are the type of person who is loth to invest in firms that pollute the planet, mistreat workers and stuff their boards with cronies, you will no doubt be aware of one of the hottest trends in finance: environmental, social and governance (ESG) investing. It is an attempt to make capitalism work better and deal with the grave threat posed by climate change.

It has ballooned in recent years; the titans of investment management claim that more than a third of their assets, or US$35 trillion in total, are monitored through one ESG lens or another. It is on the lips of bosses and officials everywhere.

You might hope that big things would come from this. You would be wrong. Sadly those three letters have morphed into shorthand for hype and controversy. Right-wing American politicians blame a “climate cartel” for soaring prices at the petrol pump. Whistleblowers accuse the industry of “greenwashing” by deceiving its clients.