capco institute journal #56




JASON SAUL | Executive Director, Center for Impact Sciences, Harris School of Public Policy, University of Chicago,
and co-founder, Impact Genome Project
PHYLLIS KURLANDER COSTANZA | Former Head of Social Impact, UBS, and CEO, UBS Optimus Foundation

In this article, we argue that there is a need to move away from the outdated ESG regime that focuses on external risks for a corporation to one that addresses intrinsic issues that can have positive commercial and societal impacts. The current ESG inputs reflect administrative data points or checklists that align with socially responsible standards, policies, and codes of conduct. However, when corporations focus on societal impacts that are intrinsic to their business, ESG can be a powerful predictor of financial return. The future of ESG depends on producing a new generation of ESG 2.0 data that reliably measures the link between societal impacts and corporate intrinsic value. To get there, three key innovations are needed:
(1) adoption of a standardized taxonomy of societal impacts, (2) establishment of an ESG 2.0 “intrinsicality” map, and (3) extension of measurement, reporting, and verification (MRV) to “S”.