The purpose of an ESG score is not to measure impact
Here’s a note from the MIT Sloan Sustainability Initiative about this article entitled “What Is an ESG Rating – and Why Are Plant-Based Food Companies Getting Such Bad Ones?“:
“If your product creates a lot of good impact in the world, as is supposedly with Tesla, it doesn’t mean that you have a good ESG rating,” Sustainability Initiative researcher Florian Berg. His research has found the ratings from different firms, while correlated, can be really different at times.
Here’s a comment on that note from Dag Messelt:
This is simple. Lack of knowledge leads to criticism of ESG scores. ESG scores measure ESG risk for the company in question and is not to be mixed up with environmental impact. For this case, the ESG score takes into account materiality that picks up global mega trends and changing consumer trends though, so there is a link (if a consumer trend that has a good impact on the world is strengthening and a company is not prepared for it, that may well have a negative impact on the ESG score), but the purpose of ESG score is not to measure impact.