Resilience: A Missing Chord in ESG Metrics

The COVID-19 pandemic has overturned worldwide business operations. Now, all the companies are focusing on environmental, social, and governance (ESG) projects. Nonetheless, the velocity of pandemic disruptions points to the fact that ESG metrics lack resilience to recover social and economic losses. In this article at World Economic Forum, Judith Rodin and Saadia Madsbjerg define the importance of resilience in sustainability projects.

Industry Oversight

In the past couple of years, ESG has become a holistic approach to identify which social and environmental protection initiatives need funding. Enterprises are using an ESG framework to get financial support from venture capitalists to support a sustainability cause. However, the current set of metrics and frameworks lack the resilience to leave an impact.

Where’s the Gap?

Investors are open to contributing, but they are uncertain of ideas suggested by leading corporates. Most are still learning about ESG investment decisions. There are many loopholes to the funding proposals. Which organization to consider, where is the data, and how to evaluate their proficiency? Investors have many doubts.

The environmental factors involve carbon footprint and waste management. It also includes data vulnerability and risks of climate change. The ‘E’ requires plans to overcome emerging challenges. Likewise, ‘S’ does not define the business vulnerabilities like the coronavirus epidemic.

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Before investing in a project, investors are evaluating the roadmap to resilience. They want proof of surviving future crises. A failsafe plan is the need of the hour. Create a reliable agenda to help organizations develop resistance to global supply chains. A resilience metric is critical to helping companies manage future interruptions. It is the key component of an ESG framework to mitigate emerging risks. Until organizations and investors embrace it, they will remain inefficient to overcome future crises.

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