April Monthly Briefing: Getting your ESG Data in Order Our views on what matters |
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My colleagues who track investor interest in sustainability, recently counted more than 600 separate ratings and rankings that a reasonably assiduous company seeking capital could report into. This proliferation has prompted a backlash of ridicule even from sympathetic audiences – not helped when the calculus of so-called sustainable funds leads them to stock up on Exxon-Mobil shares, as The Economist has pointedly observed.
What’s to be done?
One response is for governments to step in, and some regulators are doing just that – we report here on current responses in the UK and Singapore. However it’s hard to mandate good intentions, even if publishing good practice principles may help nudge behaviour in the right direction. Their ultimate power is to prohibit, and then punish rule breaking, a blunt instrument at best.
Another response, perversely, is to call for more data and invoke the potential of in-depth mass data analysis to make sense of it all (which is all “artificial intelligence” amounts to, if truth be told), going well beyond what companies themselves offer up to the raters and rankers, and trawling the world wide web. As we report, that can provide unprecedented 360º degree insights and transparency, puncturing the hype of some companies’ CSR claims. However a degree of scepticism is warranted, if social media companies’ ability to distinguish fact from fiction is any guide.
Ultimately, if the ESG “industry” is to mature and prove its worth, we’ll need informed intelligence, coupled with enough good judgement to see the big picture (the wood, not just the trees), and that’s where consultancies like ours can play a role. That old, misquoted and misattributed saying, “If you can’t measure it, you can’t manage it,” is actually a stark warning: the learned professors who variously did or didn’t say it, were really observing that in business too often what gets measured is what gets managed – to the exclusion of equally important but unmeasurable factors. Yes to better ESG data, and more besides.
Mike Tuffrey |
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| | Call to action: Five minutes of you time on a sustainability hot topic!
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