by Tom Bradley

Gillian Tett, one of my favourite business writers, is leading the Financial Times' effort to bring ESG issues (Environment, Social, Governance) into the spotlight. Indeed, the newspaper has a whole section called ‘Climate Capital’. As Salman and I have discovered from our ESG research, the area is not short on things to think about. As we continue to peel back the onion, we find the issues to be complex, nuanced, and full of contradictions.

In a recent article, Ms. Tett writes about how artificial intelligence is being used in the field, and specifically, how much ‘greenwashing’ is going on (i.e. all talk, no action). The article is discouraging in some respects, but she closes with a more optimistic view, which I happen to share.

“Just because ESG is about virtue signalling and risk management, does not mean it is meaningless. On the contrary, the very fact that company executives feel the need to “signal” ESG virtues shows how the interplay of digital transparency and shifting social norms is creating a feedback loop that cannot be ignored. If that encourages companies to change strategy, say by cutting carbon emissions, it is good. If it puts pressure on governments to make crucial reforms, like introducing a carbon price, it is even better, particularly if companies are shamed into demanding such policy actions.”