ESG: What About The S and the G?

Diana Ribeiro Duarte, Pedro Capitão Barbosa e Inês Meneses Lampreia assinam o artigo “ESG: What About The S and the G?”, publicado na plataforma digital Lexology.

« ESG contradictions – where do the S and the G go?

Asset managers and other players in the financial industry are rushing to reap the benefits of offering “green” investments opportunities. However, venturing into the maze of ESG compliance has proven to be somewhat of a struggle: in fact, the main reason behind the complexity of ESG lies in how contradictory the adoption of ESG criteria can be and the natural trade-offs that occur in the pursuit of ESG goals.

Case in point: in the article “ESG should be boiled down to one simple measure: emissions” (21 July 2022), Mark Harris, writing for the Economist, offers great examples of ESG contradictions. For instance, while the closing of a coal mine can help reduce emissions and mitigate climate change, it can also harm workers and suppliers who rely on it for their livelihoods.

The article highlights the need for a simple and effective approach to ESG, by suggesting that instead of trying to consider multiple ESG factors, investors should focus solely on one ESG factor – emissions. While the article acknowledges that emissions are not the only ESG factor that investors should consider when making sustainable investments, it argues that they should be given greater weight in investment decisions, by suggesting that investors can use emission data to compare companies within the same industry and identify leaders and laggards in terms of environmental performance. (…)».

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