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Q1 2023
PitchBook Analyst Note: Concerns About and Criticisms of ESG
March 8, 2023
Sorting through the top criticisms of ESG
Tracking and mitigating material environmental, social & governance (ESG)-related risks within investments strikes some GPs and LPs as common sense. But the ESG strategy rankles some investors, especially those who view the now-politicized risk evaluation framework as a subjective, unethical form of virtue signaling.
In our latest analyst note, Concerns About and Criticisms of ESG, analyst Anikka Villegas breaks out and dissects five oft-repeated arguments against the use of ESG. The report spells out which concerns are based in reality and which are born from misinformation.
Table of contents
| Key takeaways | 1 |
| Introduction | 2 |
| Sentiment 1: ESG is subjective, and ESG performance is difficult to substantiate through measurement and comparison. | 3 |
| Sentiment 2: ESG requires sacrificing returns and constitutes a breach of fiduciary duty. | 5 |
| Sentiment 3: ESG is redundant because it is already part of best practice. | 7 |
| Sentiment 4: ESG as a whole distracts from the highest-priority issues and areas of potential Impact. | 9 |
| Sentiment 5: ESG is mostly virtue signaling and rarely involves follow-through on the actions stated or implied by ESG practitioners. | 10 |
| Conclusion | 11 |