ESG ratings: whose interests do they serve?

A great article that is worth the read from the Financial Times, where they discuss ESG ratings and how they have permeated the global financial landscape, showcasing corporations' adherence to Environmental, Social, and Governance principles. But whose interests are predominantly served by them? Investors often leverage ESG ratings to navigate through investment opportunities, aligning their portfolios with sustainability and ethical practices. Meanwhile, corporations utilize them as benchmarks, highlighting their sustainability efforts and attracting capital. Critics argue that ESG ratings sometimes paint an overly optimistic picture, prompting discussions on their efficacy and impartiality. Thus, while they aid informed investment, the comprehensiveness and standardization of ESG ratings continue to be paramount to serving the diverse interests of all stakeholders authentically and equitably.