The problem with ESG is the height of expectations, as a silver bullet to combat climate change. ESG is a practical meta framework to do business the ethical way, but the impact of the bottom line and the ways to measure it are deeply contextual.
ESG needs to be seen across the spectrum, some companies would need to improve their compliance a lot more than others. The carbon intensive sector needs to be gauged from a transitions lens, and a lot of historical and cultural factors are at play. Wars will trigger energy security concerns and will have a direct impact on the pockets of lower income families in the impending winter and at the gas station.
Metrics which are required to measure impact need to be thought afresh. How do we measure the impact of modern slavery legislation on Global Production Networks and impending BHR litigation is one way of a proxy measure to put a dollars and cents measure on taking care of vulnerable actors.
The cost of noncompliance with ESG measures may not be a direct profit imperative on the balance sheet. But non-financial measures are meant to map the weak signals that are a proxy for black swan accidents.
Climate litigation is an immediate business continuity risk for energy, power, and resource companies. Again, look at the context while buying into the anti ESG politics which is a spanner in the works for communities who depend on oil in Texas. Stranded Assets is an important lens too.