Global #ESG-labelled assets are expected to surpass USD 40 trillion in 2030. But how is their sustainability performance measured?
A new OECD report compares over 2,000 ESG metrics from eight major ESG rating products. Key findings include:
➡️ ESG ratings reflect companies’ policies and activities rather than their impacts. 68% of all metrics measure company policies and activities rather than outcomes. This emphasis on company-reported efforts over the tangible effects of these efforts is particularly pronounced for topics such as labour rights (81%), human rights (89%), and biodiversity (82%).
➡️ Some ESG topics are covered in detail while others are omitted. Performance on established ESG topics like corporate governance, business ethics, and environmental management is measured using 20+ metrics on average, compared to less than 5 metrics for topics such as biodiversity, business resilience and community relations. Other topics are entirely omitted from some rating products, including climate resilience, human rights and corruption.
➡️ The same ESG topics are measured differently by different rating products. Products are shown to display significant variation in the assessment of the same issues. The number of metrics used to measure corporate #GHGEmissions, for example, ranges from 1 to 47 metrics across different products, while the number of metrics used to assess #CorporateGovernance ranges from 4 to 113 metrics.
➡️ Sustainability due diligence is barely measured. There are increasing regulatory expectations for companies to report on or conduct due diligence on sustainability risks and impacts. However, of the 2,000 metrics analysed, less than 5% are associated with enterprise-wide due diligence measures and only 7% with management of supply chain sustainability.
🔗 Read the full report here: https://brnw.ch/21wQPPJ
#OECD #ResponsibleBusinessConduct #RBC #ESG #ESGInvesting #Sustainability #SustainableFinance
Carmine Di Noia, Allan Lerberg Jørgensen, Barbara Bijelic, Benjamin Michel, Konstantin Mann, Caio de Oliveira, CFA, Adriana De La Cruz, Hannah Koep-Andrieu, Thorfinnur Omarsson
