Fundamentals ESG

The lack of a governmental organization issuing ESG certificates could lead to a several inconsistencies, greenwashing, reduced credibility, and missed opportunities for improvement in corporate sustainability practices.
Having a reliable and standardized ESG certification process would likely benefit stakeholders, the public, and the planet by promoting genuine sustainability efforts and transparency among corporations.

Due to the lack of a standardized government agency that certifies businesses on their environmental, social, and governance (ESG) standards, corporate sustainability will not develop as much. Customers, businesses, shareholders, and other stakeholders will benefit from having a trustworthy resource to implement ESG practices.

I think governmental involvement in ESG is a matter that will vary from country to country. Regulations may impact certain aspects of ESG, so, in that regard, there can be some benefitial standardization that takes into account a nation's context. There are also some ESG that provide third party verification but it can also result in greenwashing. I think it is a healthy process to involve both the government, third party certifications, and volunteer disclosures that provide a more holistic report of a company.

The main problem is that there are no legal standards to obligate corporations in every corner of the world to demonstrate their indicators and measurements in line with ESG (Environmental, Social, and Governance) standards. As consumers and members of different organizations, we have the responsibility to stop supporting brands that have a negative impact and to urge our organizations to refrain from dealing with companies that do not respect human rights or harm the environment.

Some solutions from civil society organizations involve organizing and urging policymakers to implement policies that compel companies to adhere to ESG standards. However, it is essential to assist companies in accomplishing these standards, as there may be a backfire effect due to the costs involved in implementing measurements without a proper structure, which could impact the economy and the companies' sustainability in the short run.

While there are standards like ICONTEC and ISO certifications that can help companies achieve some of the ESG goals, they are still not mandatory. Therefore, regulatory frameworks and civil society campaigns can be helpful in addressing this issue in the short term, but it is a global responsibility to ensure the sustainability of humankind and our environment.

Acquiring this type of certification entails a high cost that most small companies and startups cannot afford. Therefore, there must be an affordable way for small companies and startups to receive mentoring and financial support to meet ESG standards from the outset. But at the same time, there is no need for the company to achieve ESG standards in a short run or immediately. So, if there is no priority, it can be perceived as something that doesn't matter.

Thanks everyone for your response. In my opinion, there is a lot of distrust in the ESG investing world, as more and more ESG scandals exposed, making ESG is not more than a well packaged marketing or PR. Having a government-based Certification could be a solution but with the different jurisdictions around the globe, we may further saturate the already confused corporates and publics with the Alphabet Soup of ESG. I think time will tell eventually, which validation method is the best in ensuring lower risk of green washing. SO far, I am in the opinion that B Corp offers the best solution, for the reason that it has third party audits and a purpose clause in the corporate constitution to ensure company remain committed to benefit all stakeholders.

Although there is no current Government organization that hands out ESG certification, Companies are allocating more resources towards ESG improvement and compliance reporting. The reasons include: attracting investors, building trust and good reputation, retaining employees, reducing cost.
However, involvement of government in ESG performance and reporting can maximize the benefits by requiring corporations to incorporate Environmental, Social and governance factors of sustainability in their businesses.
Climate related disclosure is one part of the ESG, mandating businesses to disclose their impact on climate ensures corporate compliance.
Therefore, Government should take a role in regulating ESG disclosure, ratings and certification to protect people, environment and planet.