With sustainability becoming an increasingly significant consideration for discerning investors, being able to differentiate between true sustainability and merely a green veneer – or, ‘greenwashing’ – will become increasingly important as time goes on. That is why Tribe Impact Capital wants investors to know the risks of relying on ESG (Environmental, Social and Governance), and how a promising acronym might just be another way of pulling wool over consumers’ eyes.

According to the Tribe analysis, ESG has become a ‘powerful framework’ for businesses to consider their operational risks by using a shared language, and to provide shareholders and lenders with a gauge of the extent to which companies identify and mitigate against these risks.

However, despite encouraging steps in the right direction, and introducing sustainability vocabulary into corporate discourse, a major problem with ESG data sources is that the consumers are led to believe assertions of ‘sustainability’, ‘responsibility’ and ‘impact’ often provided by a singular piece of publicly available information.

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