Too many ESG measures lead to reporting fatigue
Environment, social and governance have become critical issues in the way investors judge companies, but corporates face too many ESG measures suffering from too little standardisation.
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Given the importance of sustainability to current business models, it is no surprise that those measures which rate company performance on environmental, social and governance (ESG) issues have become highly influential.
But we now have scores of methods and providers. For my research, I investigated 218 different ESG initiatives and interviewed 45 asset owners, asset managers and companies in the Netherlands, the UK and Germany. I found that reporting fatigue at company level is a substantial cost that is often overlooked. What makes matters worse is the lack of convergence of ESG ratings and rankings.
Although this industry can be usefu
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