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Pensions Impact: More work needed to make ESG meaningful

Date published: Sunday, 20 December 2020

Neil Brown comments in this article for Pensions Expert looking at what more work is needed to make ESG meaningful.

“At present, there is a fragmented and highly varied approach to measuring ESG. There is only around 60 per cent correlation between the range of ratings approaches that are widely used, compared with 99 per cent for different credit ratings providers.” The problem is acute in passive products, which “tend to rely heavily on limited and incomplete approaches that focus on carbon footprints, rather than a wider and more meaningful understanding of ESG”, he said. Mr Brown noted that there needs to be a more “holistic understanding” of ESG criteria that considers “the full supply chain and genuinely incorporates all three aspects of ESG”.

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