Investors are looking for returns on ESG investments. ESG stands for Environmental, social and governance which is evolution of the triple bottom line approach that described certain businesses. Businesses are reporting on ESG due to employee interest and in order to gain "conscious" businesses which improves their brand value. One big concern is that the regulators and federal banks such as SEC and Federal Reserve have loosely defined ESG. With no clear definitions, financial institutions such as Goldman Sachs are marketing products as ESG products to capture investor interest.

A recent article (cited below) states that BNY Mellon was fined $1.5 million for "misstatements and omissions about ESG considerations." The article cites that the ESG market is $41 trillion globally without any legal definitions of ESG. Due to lack of legal definitions, firms like S&P and MSCI are coming up with their own definitions which can be ambiguous. Therefore, financial institutions are using loopholes to ensure that investors that are also conscious about ESG, invest in through these financial institutions.

My opinion is that companies should be transparent about their ESG products which will lead to long-term sustainability of the ESG products. ESG products have longer-term returns which can be beneficial for investors such as pension funds or insurance companies that are looking for less-risky funds. Financial institutions are choosing short-term returns for more long-term returns which can be detrimental to the ESG market. Therefore, it is in interest of the financial institutions to maintain transparency and report accurately on the ESG products. Additionally, honest practices will lead to lesser regulations and due to the nascency of the ESG market, over-regulation can hamper the ESG sector's growth potential. Regulators are more likely to create stricter laws if they observe malpractice as done by some of these financial institutions.

Are you agree/disagree? need reason.