Environmental, Social and Governance Practices for Value Creation in the Commonwealth
The concept of ESG is used to effectively assess longer-term environmental, social and governance risks and opportunities for firms. It has gained traction in recent years with the public sector and with international finance institutions.
Three key challenges remain to ensure effective ESG sector outcomes and growth. First, the most common criticism of ESG is that it provides opportunities for companies to engage in ‘greenwashing’ – inflating their sustainability credentials while continuing business-as-usual. Second, the application of ESG lacks a clear or standardised definition or assessment methodology. This results in high uncertainty around scoring and impact. Finally, although ESG has been growing in all regions, the maturity of regulatory and policy frameworks is highly unequal.
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