ESG, Social Purpose, and the Power of Business
Companies can be powerful community actors, driving impacts (good and bad) on communities and the environment. Measuring these impacts through ESG metrics and rankings is complicated work that is worth doing—even if widely respected critics disagree.
First, the illustrious magazine suggests that “because [ESG] lumps together a dizzying array of objectives, it provides no coherent guide for investors and firms to make the trade-offs that are inevitable in any society.”
ESG helps us to articulate and understand the risks inherent in the status quo, thereby showing business leaders where they might focus their efforts to mitigate that risk, in turn establishing a more resilient and valuable business.
No reasonable person expects any individual business to solve for all the world’s problems. ESG begins to help us to assess how well companies are doing. A clear social purpose helps to identify the contribution each business should be making.