ESG scandals are (luckily) a rare thing. If we rely on the RepRisk Relative Risk Indicator, then risk ratings in excess of 25 points happens only in one in 200 companies. And as I have reported here, RRI readings of 35 or above become existential threats for the CEO of a company. But once a company experiences an ESG scandal, it has significant and lasting consequences for the company, but also its peers.
Informative: active investors can show disapproval by avoiding/ selling companies with bad practices.
The problem: ESG standards and Fund badging do not work as they are misguided. E has the wrong measures - nothing to stop E.g. plastics pollution. S is vague. G has the wrong measures E.g. Tick for putting a woman on the board but ignore egregious stock options & pay for directors who add nothing.
Informative: active investors can show disapproval by avoiding/ selling companies with bad practices.
The problem: ESG standards and Fund badging do not work as they are misguided. E has the wrong measures - nothing to stop E.g. plastics pollution. S is vague. G has the wrong measures E.g. Tick for putting a woman on the board but ignore egregious stock options & pay for directors who add nothing.