Recent controversy over the prohibition of ESG investment strategies in government pension programs stems from a fundamental misinterpretation of the motivations of environmental considerations. Contrary to what many anti-ESG advocates argue, the incorporation of risk management regarding climate change allows investors to fully evaluate the risks associated with certain investments, serving to ultimately aid profitability, not inhibit it. The stigmatization of ESG strategy acts as a distraction from using available tools like ESG frameworks to analyze a company and make decisions about it. By considering climate risks and opportunities, investors are able to pursue profitability while driving positive environmental change.

The EU is continuing its role as a leader in global sustainability with the adoption in November 2022 of the Corporate Sustainability Reporting Directive (CSRD). The CSRD is an effort to standardize sustainability reporting. Standardization is just one of many groundbreaking changes in the program, with the most significant being the requirement that all large companies with business in Europe comply.

In the past decade, opponents of ESG have relied on the argument that ESG is at odds with a company’s profitability and “bottom line’’. However, as implementation of ESG strategies and metrics grow, data on their impact is increasingly accessible, with conclusions...

Companies of all sizes are including ESG considerations within their strategic decisions.  While for some this is not new, each are challenged by novel measuring and accountability requirements.  These include determining the impact of these considerations while assuring that matters previously ignored, are now included.