ESG is not delivering

Duncan Mavin’s Feb. 22 Wednesday Opinion column, “Another front in our self-destructive culture wars,” pointed out that the effort to link investments to environmental and social standards is taking heat from all sides. Conservatives such as Florida Gov. Ron Desantis portray large investment firms such as Blackrock as “woke capitalists,” while liberal critics see ESG investing — applying environmental, social and governance standards — as a marketing scheme aimed at luring in investors with empty promises of maximizing shareholder returns while also protecting the environment and human rights.

Mr. Mavin’s piece did not note that ESG frameworks are not fulfilling their principal objective, which is to give investors reliable data on company performance around topics such as their carbon footprint or treatment of workers in global supply chains. And it’s not just liberals raising these concerns. Last summer, the Economist devoted an issue to this subject, concluding “measurement of ESG data needs a big overhaul,” in part because “there is little clarity about what ESG raters intend to measure and what their methodologies are.”

Mr. Mavin was right to advocate for a common-sense approach to ESG. But this approach needs to acknowledge what the Economist called “trade-offs” between maximizing financial returns and doing what’s best for people and the planet.

Michael D. Goldhaber, New York The writer is a senior research scholar

at the Stern Center for Business and Human Rights at New York University.