Challenges Facing ESG Investing
Environmental, Social, and Governance (ESG) investing is an approach that incorporates environmental, social, and governance factors into investment decisions. While ESG investing has grown in popularity due to its ethical and sustainable focus, it faces several challenges and criticisms:
or “bad” investment. This can lead to inconsistencies in ESG assessments.
6. REGULATORY AND COMPLIANCE RISKS
As ESG investing grows, so does the regulatory scrutiny. Different regions have varying regulations, and staying compliant can be complex and costly for investors and companies.
1. LACK OF STANDARDIZATION There is no universally
7. OVEREMPHASIS ON CERTAIN SECTORS
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accepted framework for ESG criteria, leading to inconsistent definitions and measures. Different rating agencies use varying methodologies, resulting in disparate ESG ratings for the same company. 2. GREENWASHING Companies may exaggerate or misrepresent their ESG efforts to appear more sustainable than they are. This practice, known as greenwashing, can mislead investors and undermine the credibility of ESG investing. 3. PERFORMANCE CONCERNS Critics argue that ESG investing may sacrifice financial returns for ethical considerations. While some studies show that ESG investments can perform as well as or better than traditional investments, others suggest that limiting investment choices can hinder performance. 4. DATA QUALITY AND AVAILABILITY Reliable ESG data is often difficult to obtain. Companies may not disclose comprehensive information, and the available data may be of varying quality and depth. 5. SUBJECTIVITY AND BIAS The subjective nature of ESG criteria means that personal values and biases can influence what is considered a “good”
ESG criteria often favor certain industries (like renewable energy) over others (like fossil fuels). This can lead to over-concentration in specific sectors, reducing diversification and increasing risk. 8. IMPACT MEASUREMENT CHALLENGES Measuring the actual impact of ESG investments can be challenging. It’s difficult to quantify how investments directly contribute to environmental and social goals. 9. CONFLICTS OF INTEREST ESG rating agencies may face conflicts of interest, especially if they are paid by the companies they rate. This can compromise the objectivity and reliability of their ratings. 10. EVOLVING STANDARDS ESG standards and best practices are continuously evolving. Keeping up with these changes can be challenging for investors and companies alike. Despite these challenges, ESG investing continues to attract attention and capital due to growing awareness of sustainability issues and the potential for long-term value creation. However, addressing these problems is crucial for the continued development and credibility of ESG investing.
LIME CHICKEN WITH CORN AND POBLANO SALAD
Inspired by PureWow.com
INGREDIENTS
Chicken • 3 tbsp olive oil
Corn and poblano salad • 2 tbsp olive oil • 2 poblano peppers, diced • 2 garlic cloves, minced • 1 14-oz can of corn • 4 scallions, minced
• 1 cup all-purpose flour • 1 1/2 tsp garlic powder • 1/2 tsp cayenne pepper • 1 1/2 tsp salt • 3/4 tsp black pepper • Zest of 1 lime • 8 chicken thighs
• Juice of 2 limes • 1/3 cup chopped cilantro • Salt and pepper
DIRECTIONS
1. Preheat oven to 400 F. 2. In a large oven-proof skillet, heat olive oil over medium heat. 3. In a bowl, whisk flour, spices, and lime zest. Dredge chicken in the mix to coat. 4. Add chicken, skin-side down, to skillet, then place skillet in the oven for 30–35 minutes. 5. In a medium skillet, heat olive oil and add poblanos. Sauté 4–5 minutes. Add garlic and sauté for another minute. 6. In a bowl, add poblano mix, corn, scallions, lime juice, and cilantro, toss and serve with the chicken.
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