"Time for Change: Call for Clear ESG Standards"

In a world where sustainable and responsible investing is becoming increasingly important, the ESG community stands at a crossroads, as noted in a recent insightful commentary by Reuters. ESG, which stands for Environmental, Social, and Governance, has come a long way since the start of this millennium when the concept was largely unknown to most investors. Today, however, ESG is an integral part of the financial world. Nevertheless, the sector faces criticism and challenges that call for action.

In the United States and Europe, skepticism is growing, partly due to accusations of 'greenwashing' where companies appear more sustainable than they are in reality. This criticism has led to calls for more transparency and the implementation of the EU Green Claims Directive. This new regulation requires investment firms to substantiate their green claims with solid evidence and standards.

At the heart of recent discussions is the need for clear, objective standards for ESG reporting. The current landscape of ESG investments is plagued by subjective reporting and a lack of universal criteria, making it difficult for investors to assess the real impact of their investments. This situation undermines trust in ESG funds and products and hinders progress towards a more sustainable economy.

The article highlights the importance of a coordinated approach, both at the European level with EU sustainable finance and corporate reporting guidelines, and globally through initiatives such as the establishment of the International Sustainability Standards Board (ISSB). These steps are crucial to bring coherence, accuracy, and objectivity to ESG reporting, and lay the groundwork for a sustainable future.

At the same time, there is a call to reform the 'disclosure industry', often criticized for generating an excess of non-financial data that sows more confusion than clarity. The sector is urged to focus on what truly matters to investors and to rid itself of unnecessary bureaucracy. An initiative like DuPa in the Netherlands, which provides clarity in assessing ESG information about buildings (by banks and appraisers), is a step in the right direction (Editorial).

The article concludes with a powerful message: the time is ripe for change. It is time to put an end to subjective reporting and advocate for clear, objective standards for ESG. Only by embracing these changes can the ESG community fulfill the promises of sustainable and responsible investing, and contribute to solving some of the most urgent challenges our world faces.

Click here for the full Reuters commentary.