A Critical Lens on ESG and ESG Ratings

Abstract

This article examines the importance of ESG (Environmental,

Social, and Governance) and why it matters. Aligned with the

theme of the 27th Annual Conference of the Institute of Certified

Secretaries (ICS), titled “ESG for a Sustainable Future: Aligning

People, Planet, and Profit,” the article explores the criticisms of

ESG, categorizing them into four main points. These include: the

argument that ESG is not desirable, as it can be a distraction; the

assertion that ESG is not feasible due to inherent difficulties; the

belief that ESG cannot be effectively measured; and the claim

that even when ESG can be measured, there is no meaningful

correlation with financial performance. The article concludes by

examining the relationship between ESG ratings and financial

performance. Existing literature presents conflicting findings on

various aspects of ESG, including criticisms of ESG itself, as well

as the link between ESG ratings and financial performance.