“Limits to Private Climate Change Mitigation” is an interesting working paper by the IMF on the link between ESG scores and carbon footprint.
In principle, greater attention from climate-conscious investors, shareholders, regulators and the general public on ESG considerations should normally encourage firms to improve their ESG scores and, in the process, bring down emissions.
Discouragingly, results from this paper suggest that high ESG scores are not necessarily correlated with companies’ actual carbon footprints.
Therefore, from a climate change policy making standpoint, managing GHG’s footprint cannot be achieved solely by over-relying on ESG indicators.
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Published by Wael Mohamed Aaminou
While living in the US, the 2008 financial crisis’ impact on the economy and people pushed me to question the purpose of my job as a financial consultant. I ultimately shifted gears to focus my advisory efforts on fostering a more ethical finance that puts the real economy, social welfare, and environment preservation at the center. With assignments in Northwestern Africa, Middle Eastern and Southeast Asian regions, this journey led me to challenge and shape Impact finance and Islamic finance ecosystems in as varied sectors as energy, healthcare, education, and agriculture.
Working in more than 10 countries has taught me that sustainable development challenges are complex, and that a viable solution would start by prioritizing efforts on most pressing issues when resources are limited. This is particularly true for climate change which transversally impacts virtually all SDGs. Today, as a sustainability finance advisor, I mobilize people and resources toward the adaptive challenge of building together the sustainable world that our children and planet deserve.
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