A Short Guide to ESG: Finance
- Media Manager
- Jan 13, 2024
- 1 min read
Activist Post
Written By: Paul Mueller
Published: January 13th, 2024
ESG has made significant inroads in the finance and investing community. Environmentalists have long used divestiture campaigns and impact investing to influence companies via finance. Their impact was relatively small and on the margins of financial markets. Today, they hope to make these activities central to finance.
Rather than simply trying to persuade individual asset managers to punish big polluters, ESG advocates want to rebuild the financial system around “sustainable finance” so that capital flows to firms advancing ESG goals and away from firms that don’t.
Their ideas have gained traction by arguing that ESG criteria can help companies assess and manage risk better, thereby improving profitability. But, in a classic bait and switch, companies tend to be scored not by their risk mitigation, but by whether they meet certain ESG parameters of emissions, renewable energy usage, diversity, stakeholder buy-in, and the like.
ESG “sustainability” finance falls into three buckets:
Sustainability Debt Markets
Sustainability Equity Markets
Sustainability International Transfer Payments
