Humanity will need to invest an average of $3.5 trillion annually over the next 30 years in climate action. Where will that money come from? Hopefully, ESG investment, but the confusion and exaggeration surrounding ESG-climate standardization and ratings detract  ESG investing from its real potential. 

The SEC has received over 5,000 comments on its proposed disclosure requirement for carbon emissions.  At the same time, the EU has spent eight years finalizing its Corporate Sustainability Reporting Directive mandating non-financial reporting. More than 70% of executives surveyed across multiple industries and regions reported that they lack confidence in their non-financial reporting. 

While there is broad agreement across countries that climate change is a significant problem, there is a limited willingness to adopt behavioral changes with current policies. Less than 40% of respondents think it is technically feasible to stop GHG emissions by the end of the century while maintaining satisfactory living standards. 

Transitioning away from fossil fuels in hard-to-abate sectors, including air transport, steel and aluminum, and buildings, will require unprecedented and creative public-private partnerships to incentivize continued investment and discovery.   

Companies must dedicate resources, leadership, and technology to monitor and track progress and use data to set goals and tie results to concrete business metrics.  Above all, ESG efforts need to be deeply integrated into every aspect of the business strategy to have a sustained impact over time and yield meaningful societal and business returns.

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