ESG investing has been all over the headlines lately, and not in a good way. As discussions about ESG become more and more polarized—while progressive politicians push for aggressive regulations, billionaires like Elon Musk call it a “scam” and nonprofits accuse businesses of greenwashing—leaving consumers increasingly confused. As a result, as Witold Henisz puts it, the ESG movement is being delayed, which is already “having a substantive and dangerous impact,” delaying needed climate action and stymying progress towards the Sustainable Development Goals (SDGs)

However, the problem goes beyond this polarization. Even within the pro-ESG camp, there is no consensus over what ESG is, who should own it, or what should happen to formalize it. While nonprofits and social enterprises tend to want to use it as a tool to force companies to contribute to the SDGs, investors want consistent measures to evaluate financial decisions (namely risk), and business leaders want not to incur higher costs. For example, picture a social enterprise contacting a corporation with a novel solution to help achieve their newly-announced ESG targets, only to be told that the ESG leader is responsible for gathering data for disclosure purposes to investors, but not for implementing any improvements. Confusion occurs within corporations, too: imagine the regional manager of a bottling plant for a multinational corporation, responsible for reporting on key ESG metrics to one division within its company but also needing to work with innovation and product development teams, from another division, that need to start designing with ESG in mind. How can they proceed when one division needs ESG metrics for to provide assurance to investors that it is accounting for climate risk, while another is using ESG for impact and innovation?

Each of this diverse set of stakeholders has a valid claim to ESG, but they also have radically different priorities. It’s no wonder that debates around the topic between these groups often devolve into arguments, name-calling, and more shouting than listening. But if this is a problem, it’s also the movement’s potential: as a cross-sector collaboration, ESG holds out the promise of building a better planet through systems change.

The lack of a common, shared understanding holds the ESG movement back, and in the confusing debate, the implementation and adoption of meaningful practices are stalled. In order to move the debate around ESG from combative to constructive, we need a shared language through which different stakeholders can express what they want out of the movement (and thus, to be able to understand what others want out of it).

Read the full article about ESG investing by Mark Horoszowski at Stanford Social Innovation Review.