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What is ESG and why might it lead to poor decision-making?

You probably know it\u2019s short for\xa0Environmental, Social, and Governance; an acronym that covers three topics of interest to investors. In simple terms, three things they look for to determine how environmentally and socially conscious the company is. Or in even simpler terms, is this a good, ethical company?

As regular listeners will know, this isn\u2019t an investment podcast, so what\u2019s the human risk angle here? Well, metrics like ESG are a good example of how we develop systems - in this case metrics that are ways of analysing the way in which companies are run \u2014 that allow us to answer complex questions. There\u2019s nothing wrong with keeping things simple. Yet, as ESG illustrates, those systems can sometimes over-simplify the world such that we miss things, induce unintended consequences and feel good about ourselves when in fact we really shouldn\u2019t.

So I wanted to explore what ESG is and the flaws of looking at the world through the artificial lens it creates.

My guest on this episode is Alison Taylor. She\u2019s the Executive Director of Ethical Systems, part of NYU Stern School of Business, which is a collaboration between leading academics working on behavioural science, systems thinking and organizational psychology. Ethical Systems aim to help companies build more ethical and effective cultures via approaches based on credible research. We are dedicated to driving a more holistic and considered approach to the future of corporate integrity, beyond functional silos.

Alison has been on the show before - there\u2019s a link to that below \u2014 and is always incredibly insightful and great company.

In our discussion, we dissect what ESG means \u2014\xa0in theory, and in practice \u2014 and explore how companies are responding to it. That takes us onto questions such as \u2018how are companies responding to social trends like \u2018Black Lives Matter\u2019, \u2018are companies right to insist that people return to the office/work from home\u2019 and \u2018should companies have a position on every social issue that comes up?\u2019.

To find out more about Alison and Ethical Systems visit ww.ethicalsystems.org/

You\u2019ll find her on Twitter: https://twitter.com/followalisont and LinkedIn: https://www.linkedin.com/in/followalisont/\u2028\u2028Discover the Breaking The Fever podcast here: https://www.ethicalsystems.org/breaking-the-fever-podcast/
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