Where is Trust in the ESG Equation?

Investopedia offers this summary of ESG criteria.

Environmental criteria consider how a company safeguards the environment, including corporate policies addressing climate change, for example. Social criteria examine how it manages relationships with employees, suppliers, customers, and the communities where it operates. Governance deals with a company’s leadership, executive pay, audits, internal controls, and shareholder rights.

The conversations around the role of “S” (how companies treat their stakeholders) and “G” (how they are governed ) have recently been coming into focus and for good reason.

Consider the following:

• According to the Public Affairs Council members of the public don’t trust corporate CEOs as much as they trust the companies these CEOs lead: 47% place a lot of trust or some trust in major companies to behave ethically but give CEOs poor marks in this area. Only 7% believe CEOs to have high standards for honesty and ethics, and almost half (47%) believe their standards are low. October 2020
• Today, only a minority of millennials believe businesses behave ethically (48 percent vs 65 percent in 2017) and that business leaders are committed to helping improve society (47 percent vs 62 percent in 2017). Deloitte Millenial Survey 2018

Senior executives at well governed companies tend not to make unsubstantiated and bold claims about their purpose or their positive environmental and social programs…