ESG Ratings: From Intent to Performance – Between Words and Reality

ESG ratings have become essential tools for capital allocation and risk management. However, a 2025 OECD report reveals a fundamental gap between their intended purpose and actual implementation. Examining over 2,000 metrics, the report finds that most ratings measure policies and declarations (inputs) rather than tangible results and impact (outputs).

This knowledge record analyzes the economic and systemic implications of this "sustainability illusion," with particular relevance for the Israeli context. It explores how misaligned incentives reward branding over operational change, masking systemic risks in ways reminiscent of pre-2008 financial dynamics. Using case studies like Boeing and Volkswagen, the article demonstrates that real risk lies in corporate culture and incentive structures rather than formal procedures.

Ultimately, the author argues for a transition from measuring intentions to measuring performance. ESG must be reframed as a core governance and resilience tool - essential for efficient capital allocation and long-term economic stability - rather than a mere reputational asset.

לקריאת הרשומה המלאה, בקרו באתר שלנו בעברית.