ESG is viewed as an investment incentive. The idea behind it is that companies can profit while acting as a net positive for the environment and the societies they operate in, and should be incentivized for doing so by investors.
After the initial flurry of interest, in which ESG-led funds and indexes performed well, it’s becoming increasingly apparent that the concept isn’t delivering on its initial promise. A lack of clarity around ESG and a lack of uniform metric, rules and regulations have only contributed to a sense of disillusionment among investors.
