Environmental, Social, and Governance (ESG) factors have
become integral in investment decision-making. Investors increasingly recognize
their potential impact on financial performance and long-term sustainability.
This article explores the various perspectives surrounding ESG investing,
focusing on the process of translating ESG information into investment
strategies and scores. However, the process of ESG translation is not without
challenges. The article thus addresses the complexities and obstacles inherent
in translating ESG factors into quantifiable scores and investment process. One
of the challenges in translating ESG into investment is the absence of
standardized metrics and inconsistency in reporting practices. Additionally,
the dynamic nature of ESG factors makes it challenging to effectively
incorporate future changes. Moreover, translation challenges arise due to
inadequate disclosure and transparency in ESG reporting. Addressing these
challenges requires collaborative efforts from stakeholders, regulators,
investors, and companies to establish guidelines and frameworks that encourage
consistent reporting and disclosure of ESG information.