I have great respect for the people on this thread. And I have enjoyed thinking deeply with you about metrics, such as the long discussion one of the contributors (Mark) and I had in Philadelphia a few years back.

However, I have a somewhat different perspective that I would like to contribute. Basically, I think we should consider ESG metrics – and S&P making them public – from the point of view of:

1. Accuracy
2. Evolution
3. Catalytic effect

1. In terms of accuracy, existing metrics are definitely wanting in many areas, and I appreciate the value of the context-based framework (one that Mark and others have been advancing). And I have happily engaged in constructive discussion about that, because context is useful and important.

That said, I think sustainability metrics as currently constructed miss some things that are absolutely enormous; one is the effect of actually using what a company provides.

There’s a lot behind this, and we’ve spent years on it, but the short version is that if an online network supports planning the overthrow of democratically elected governments, it doesn’t matter if they use clean energy to do that. Clean energy doesn’t wash away dirty deeds.

2. Sustainability metrics have evolved quite a bit over the decades since DJSI launched. And that’s good! It took accounting hundreds of years to get to the current (imperfect) point, and we shouldn’t expect sustainability accounting to get it right immediately either. I’ll continue trying to help them involved in a useful way, as we all do.

3. What I take from Mark’s comment (Mark, feel free to respond if I’m wrong) is the belief that ESG metrics actually have a negative catalytic effect on true sustainability (they obscure it). I think that is plausible in one sense, but that there’s more to it. There are many factors that determine catalytic impact, among which are: utility, impetus (the effect on the will to act), and attention.

a. Utility: Wider availability of ESG scores increases the ease component of utility (how easy it is to use them to direct investments).

b. Impetus: Wider availability leads to more use – as does the connection of ESG metrics to stock performance. That plus more advocacy by S&P and others increases the impetus to perform research about them and talk about them, which in turn leads to more use.

c. Attention: What I think Mark is saying is that ESG metrics detract from the attention paid to better measures of sustainability, and thus are a net negative here. While there is something to that, I think it’s not zero-sum.

Most people (and investors) don’t pay any attention to sustainability metrics of any kind (ESG, context-based, or anything else). Therefore, having some kind of sustainability metrics break through to mainstream consciousness increases the overall salience of sustainability. It grows the sustainability-attention pie, so to speak.

While within that pie, it’s quite possibly true that increased attention to ESG metrics lowers attention to deeper sustainability metrics, it could also not be the case, given that S&P mentions things such as Donut Economics in its communications (e.g., p. 16 here).

Speaking personally, in the last few years I’ve noticed increasing attention to the Impacts Science discipline Valutus has developed, and this increase has coincided with increased attention to conventional ESG scores.

Mark also seems to say (again, feel free to respond if I’m wrong) that acting on ESG scores makes people feel content with their actions, thus reducing their action to promote deeper sustainability. In some circumstances, there is evidence for this effect, typically cases where an action is taken publicly.

However, there is also evidence for the opposite effect – that doing something sustainable changes how people see themselves. For example, consider this from almost 50 years ago (1972): “When people engage in actions that reduce CO2 emissions, such as turning off their vehicle engines, they are likely to come to see themselves as the type of person who cares about climate change based upon their engagement in the behavior.”

Overall, I expect increased ESG ratings availability and attention to be a positive for sustainability, in spite of the flaws in those ratings. Not because they are “right,” but because they promote movement in the right direction.

“What you measure affects what you do.”

Nobel laureate Joseph Stiglitz

As Nobel laureate Joseph Stiglitz says, “What you measure affects what you do.” More attention and impetus behind measuring environmental and social aspects of performance, even very imperfectly, could help do more to improve it.