The Washington Post

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.

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