Creating Investment-Grade Corporate Sustainability Metrics

Abstract

Rising interest in sustainable investing has led to intensified scrutiny of environmental, social, and governance (ESG) reporting. But this heightened interest has convinced many investors and market analysts that the existing ESG metrics lack clear definitional foundations, methodological consistency, analytic rigor, and reliable verification, thus creating doubts about their true validity, comparability, and capacity to distinguish corporate sustainability leaders from laggards. This chapter surveys the gaps and shortcomings in today’s ESG data and calls for a mandatory corporate sustainability reporting structure backed by government standards, review, and enforcement. Such a framework ensure that sustainability-minded investors have access to investment-grade ESG metrics that inspire trust and confidence.