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ESG investment must be built on measurement of real impact

IbyIMD+ Published 11 November 2021 in Sustainability • 7 min read

Measuring the true impact of Environmental, Social and Governance (ESG) investments is crucial to assessing the claims made by their promoters and comparing different opportunities. This is a difficult task but not impossible.


The biggest challenge facing investors in ESG-focused products or companies is how to measure their real environmental and social impact. Increasing amounts of data are available on carbon emissions, but there is less information on other environmental impacts such as biodiversity, and details on social outcomes are even harder to obtain. 

Another problem is how to weigh negative against positive externalities. How do you measure the impact of an investment that is good on some of the nine planetary boundaries identified by the Stockholm Resilience Center but bad for others?  

This is uncharted territory, but my view is that you need to start attaching dollar numbers to these things. This may involve uncomfortable questions, such as putting a…

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