Discussions of Corporate ESG Ratings Should Be Monitored By Nonprofit Industry
More and more, discussions about the efficacy, morality, and financial benefit of ESG-rated publicly-traded companies on the stock market are becoming commonplace. At nonprofitnewsfeed.com, we think that nonprofits need to be equipped with the context needed to engage both prospective donors and the public at large with what ESG is and is not. ESG, a catchall term for “Environmental, Social & Governance” is marketed to be a way to group, define, and measure companies by their broader (hopefully positive) impact on the world. However, as this op-ed from The New York Times makes clear, ESG (and ESG-related financial products like indexes or funds) are at best unproven in their effectiveness, at worst, a marketing ploy designed to obfuscate the harm done by the very companies on the list. Nonprofits should heed that fact as the general public and high-value donors discern significant investments in a wobbly economy, ESG may well increasingly become part of the conversation as a socially conscious (but financially beneficial) alternative to charitable giving in the minds of wealthy donors and investors, regardless of the efficacy of such an approach.
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