OECD slams ESG investing for being toothless at tackling climate change

The organisation representing the world’s richest countries has slammed ESG investing for being toothless at fighting climate change.

In a damning report released today, the Organisation for Economic Cooperation and Development (OECD) hit out at ESG investing for lacking “clarity” and “transparency”.

“Data inconsistencies, lack of comparability of ESG criteria and rating methodologies, as well as inadequate clarity over how ESG integration affects asset allocation” reduce the impact green investing can have on tackling climate change the report said.

The OECD said providers of ESG metrics tend to place less emphasis on negative environmental impacts and more on corporate disclosures.

“There remain considerable challenges that hinder the efficacy of these approaches, and notably ESG investing, to support long-term value and climate related international objectives.”

As a result, investors are struggling to align their portfolios toward less carbon intensive assets.