Criticism of ESG - experts warn that the term is too broad

Criticism of ESG - experts warn that the term is too broad

According to a report by www.faz.net, the World Economic Forum in Davos has criticized the use of the term “ESG” in capital investments. The problem is that the term is too broad and the gap between environmental protection and social norms is too large. The major Swiss bank UBS agrees with this criticism and is calling for clear standards for investments in biodiversity. According to UBS, biodiversity is of great importance for both the climate and the economy, with 60 percent of global economic output moderately or highly dependent on nature. It is estimated that combating species extinction will require investments of around $700 billion annually by 2030.

The impact of this call for clear standards for investments in biodiversity could be diverse. On the one hand, a clear definition and transparency would help attract private investors because the investment process would be clear and comprehensible. This could lead to an increase in investment in environmental protection and biodiversity. On the other hand, UBS also calls for states to play an active role, especially in a transition phase, in order to mobilize sufficient private capital for these investments. This approach has the potential to link government funding and subsidies to positive environmental outcomes, which would lead to increased inclusion and funding of environmental protection and biodiversity projects.

These demands show that the investment landscape could change and that companies and industries that rely on biodiversity may increasingly become the focus of investors and government funding. However, it remains to be seen how policymakers and investors will respond to these demands.