In the world of investing, the growing interest in ESG ratings is undeniable. These ratings, however, are largely contingent on the degree of the disclosure provided by companies. Such disclosure is in turn guided by a range of disclosure standards and frameworks.
Despite the significance of ESG factors, establishing a causal link between their quality and long-term performance remains a daunting task. While some studies have indicated a positive correlation, others have yielded no discernible effect.
Incorporating ESG considerations into valuations presents an additional layer of complexity. The lack of consensus on standard metrics and the subjective nature of ESG factors pose obstacles to this endeavour. Nonetheless, the potential benefits of integrating ESG considerations into investment decisions make it a pursuit worth exploring.
#investment #sustainable #esg #esginvesting #esgreporting
#100daysoflearning Day 024
Originally published on My LinkedIn on March 7, 2023.