ARMANDO CASTRO | Associate Professor, The Bartlett School of Sustainable Construction, University College London (UCL)
MARIA GRADILLAS | Senior Researcher, Department of Management, Technology and Economics, ETH Zurich
In a world where organizations are increasingly held accountable for the impact of their operations on the environment and society, environmental, social, and governance (ESG) reporting and metrics have emerged as the primary paradigm for assessing an organization’s sustainability efforts. Yet, it is an area with competing concepts, an ever-expanding set of measures and requirements, and a growing ratings and standards industry.
In this article, we discuss how ESG initiatives and measurements can help organizations create value rather than merely being a compliance exercise. We do so by firstly, emphasizing the importance of ESG reporting and ratings for organizations, notwithstanding their limitations. Secondly, we highlight the need for transparency of the ESG metrics and activities being implemented by organizations and the priority of avoiding greenwashing risks. Finally, we stress the requirement of senior management involvement and accountability in ESG initiatives that create long-term value.