ESG reporting is the new arm of corporate social responsibility (CSR), and in an attempt to crack the S&P 500 ESG, some companies are catching the ire of the U.S. SEC (Securities and Exchange Commission).
Is that confusing? That’s one of the problems with environmental, social, and governance (ESG) reporting. Ambiguous language, confusing acronyms and unclear definitions detract from the insight that the metric is meant to provide.
Academics and business executives question the effectiveness and morality of ESG reporting, often by citing its lack of consistency. Perhaps most notable among them was Elon Musk when he tweeted, “ESG is a scam.” Musk made the claim after his electric vehicle company Tesla was pulled from the S&P 500 ESG Index.
EY’s global vice chair of sustainability, Steve Varley, is a proponent of ESG reporting and investing, but he admits that “more work must be done to encourage open collaboration and trust-building among those who shape the industry.”
In order to maintain the progress made in sustainability reporting, EY (long known as Ernst & Young) has commissioned a new report on how to strengthen ESG ratings.
What’s wrong with current ESG reporting?
To appeal to consumers and investors, companies want to share publicly that they are responsible corporate citizens who care for the environment and important social causes. Without a regulated standard for ESG reporting, however, companies are essentially free to claim what they…
