Can Global Regulators Save the ESG Movement From Itself?
Without state intervention and global standards, the environmental, social, and governance movement is a recipe for greenwashing and corporate deception.
It has been two months since the 2021 United Nations Climate Change Conference, or COP26, ended in a plume of promises, pledges, and finger-pointing.
Few left satisfied, and if a show of united resolve was the point of it all, it was a failure. “Change is not going to come from inside there,” climate activist Greta
Thunberg said. And she was right.
With Glasgow’s gloom in the rearview mirror, practical campaigners are turning back to national governments, which for better or worse are the still the creators and guardians of binding, enforceable laws and regulations. And here there’s a bit more hope, as financial and environmental regulators in the United States, European Union, and world’s other major market economies are moving to standardize the way progress—and prevarication—are measured.
Carbon footprints measured by emissions are a key metric, of course. But the focus of regulators such as the U.S. Securities and Exchange Commission (SEC),
the U.S. Federal Reserve, the European Central Bank (ECB) and many others is a broader and more empirical formula than the tally of emissions cuts. The so-called ESG movement, which seeks to incentivize good behavior by rating the environmental, social, and governance behavior of companies, government
agencies, and other entities, is at the center of these efforts.