ESG is in the eye of the beholder

As ESG becomes more widely integrated in the financial sector, there is a growing desire to try and quantify its impact. This has led to the idea that ESG might be codified as a factor, in the same vein as value, growth or momentum. While the idea is appealing, it is also impractical. ESG means different things to different people, and its materiality varies widely between countries and even within industries. Clearly emissions are a major factor for an energy company, but for a brewer water pollution is a more pressing concern. Not only are the qualitative elements unwieldy to integrate...