If 2021 was the year ESG became mainstream in the financial world, then 2022 was the year things got bumpier. And everything around ESG points to 2023 being even more intense.

Before diving into why, let’s define terms. ESG is not sustainability. ESG — the acronym stands for environmental, social, and governance — has been mostly focused on screening companies as investments, largely by understanding how a business is affected by environmental and social issues (with an additional focus on whether a company has good governance in place to manage those risks and pressures). Sustainability is a much broader idea, focusing on a company’s role in society, how it creates value by managing its environmental and social impacts (both positive and negative), and how its actions affect a wide range of stakeholders.

Continued