07.02.2023 - Request article
Why are ESG products the fastest growing segment of the financial services industry?
Large and small companies, manufacturing companies and service providers - the need to evaluate one's own sustainability on the basis of ratings is growing everywhere. ESG ratings as an umbrella term have been playing a seemingly important role for several years now, especially for listed companies. The sale of investment products with a "good" ESG rating is the fastest growing segment of the financial services industry, confirming the high attractiveness of investments with an "ecological" label.
What is behind ESG labels?
The quality of labels is questionable, as the Bloomberg article "The ESG Mirage" points out. On closer inspection, this is not surprising as long as the assessments are carried out by financial experts whose training and profession are designed to increase financial returns. In addition to extensive scientific and technical skills, comprehensive legal understanding is also necessary to perform meaningful ESG ratings.
What ESG ratings are available?
ISO - the international standards organization has numerous standards in its program, which are set by experts from 167 nations, consensus-based and market-relevant guidelines taking into account the state of the art. Both the process of developing the standards and a voluntary review by third parties meet the highest standards in terms of transparency, regulation and competence.
Are there recommendations to avoid green washing?
Ineffective and often costly ESG ratings that offer no real, practicable improvement approaches for companies and harbor the danger of green washing ultimately led to the European taxonomy and the Corporate Sustainability Reporting Directive. Based on positive and proven developments, the European Union recommends the recording of the environmental impact of companies or products within the framework of international standards for life cycle analyses or corporate carbon footprints. These are also often explicitly mentioned in EU legal documents.
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