NextBillion - An Initiative of the William Davidson Institute at the University of Michigan

By Grant Harrison

The market demands ESG discipline, period. Whether you view ESG as the alpha and the omega, an opportunity for capitalism to atone and course correct, or as a Trojan horse for a woke agenda, this fact is a stubborn one.

For example, around $120 billion poured into sustainable investments during 2021, and the amount invested in ESG strategies increased tenfold from 2018 to 2020. Last year, about $1 of every $3 managed globally lived in ESG strategies. As myriad surveys from major consultancies will tell you, millennials are about to experience the largest wealth transfer in this country’s history, and they love this ESG stuff.

On the surface, these numbers scream “win!” but not all — even those within the ESG camp — see this growth as cause for celebration. I’m not referring to critiques such as those of U.S. Securities and Exchange Commissioner Hester Peirce, who sees the way corporations are being assessed according to ESG factors as “labeling based on incomplete information, public shaming, and shunning wrapped in moral rhetoric preached with cold-hearted, self-righteous oblivion to the consequences.”

Photo courtesy of Pablo García Saldaña.