Is ESG greenwashing in disguise?

**Tuesday 24 September 2024**

**ESG Standards Falling Short of Creating Real Change, Experts Warn**

Lindsay Hooper, acting CEO of the esteemed University of Cambridge Institute for Sustainability Leadership, has sounded the alarm on the current state of Environmental, Social and Governance (ESG) reporting. In a recent piece for the Financial Times, she boldly stated that the existing ESG standards are failing to drive the necessary transformation.

Despite witnessing decades of corporate pledges and commitments, businesses are still wreaking havoc on the environment, with carbon emissions soaring to new heights. The concept of ESG standards being merely a facade of greenwashing has gained traction, leading to a wave of corporations opting out of these initiatives in a bid to avoid real, substantive change.

According to a report by Forbes, many companies are now turning to alternative tactics such as ‘green hushing’, where sustainability efforts are downplayed, or ‘green stalling’, where any discussions related to sustainability are postponed indefinitely.

Nevertheless, the core principles of sustainability continue to hold significance in the corporate landscape. In response, regulators have ramped up their efforts in 2024, compelling businesses to confront critical issues such as climate change, worker safety, and human rights concerns.

Despite facing setbacks, Bloomberg forecasts that global ESG assets are poised to reach an impressive $40 trillion (£30 trillion) by the year 2030. The key challenge for companies now lies in addressing the inherent conflict between sustainability and profitability. It is imperative for the market to readjust its priorities and gravitate towards rewarding long-term resilience over short-term gains.

To facilitate this transition, both legislative measures and large corporations must collaborate in reshaping business incentives and penalties. Additionally, companies must furnish tangible, quantitative evidence to substantiate the efficacy of their strategies and demonstrate meaningful impact.

Forbes writer Mary Foley succinctly encapsulated the predicament faced by businesses being pulled in multiple directions by regulatory obligations, public perception, and shareholder responsibilities. She asserted that the solution does not reside in shying away from ESG and sustainability challenges but rather in addressing them head-on as formidable business hurdles, systematically driving improvement and progress.

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