ESG’s Risks in Investing World

       "ESG" is "Environmental, Social, and Governance," which are three key factors that measure the sustainability of investment in a company or business and its impact on society. Many companies use ESG to reduce the adverse effects on the environment and culture, and ESG is becoming a significant part of it. However, ESG is dying in the corporate and investing world, and I'll explain this in detail.

For the first point, there are concerns about greenwashing. Greenwashing refers to the act of a company producing a product that adversely affects the environment while still putting on an eco-friendly image through advertisements. There are risks of some companies greenwashing their products so that environmentally conscious investors and consumers who want to buy environment-friendly products will be attracted even though those products are not actually environmentally friendly. Without sufficient verification processes of ESG, those bad companies would make claims about their ESG company behaviors. This would make investors need help to determine which companies are eco-friendly. These overall risks would damage the reputation of ESG concept investing. Investors might be skeptical and suspicious about putting ESG on their decisions if those degrading kept processing.

Also, the skepticism of investors would negatively affect the ESG. Some investors would think about financial returns if they put ESG in their decision-making. If there is a negative effect of ESG on their profit-making, they will hesitate to incorporate the ESG concept into them. Those ESG would benefit from long-term sustainability, but this might be the same as the lack of short-term positive effects for their financial positive effects. For ESG, the reporting for the investors might need to be more consistent and standardized, which makes it hard for investors to collect the data for their financial performance. These would cause investors to be more focused and believe in traditional financial metrics than ESG criteria. So, it would be hard to incorporate ESG.

Hence, as ESG has a lot of risks like greenwashing or investor skepticism, it would make ESG die in the corporate and investing world.