[imperfectcats]

Goodhart's Law: https://en.wikipedia.org/wiki/Goodhart%27s_law

"When a measure becomes a target, it ceases to be a good measure"

Any ESG system that uses a calculated number composed of many areas will quickly fall prey to Goodhart's Law. With an E, an S and a G to work on, the areas for change are numerous enough that Goodhart's Law holds even in a non-cynical world.

When an edict that "We need to increase our X score this quarter" is handed down, the real, living people who have to improve the ESG rating are likely limited in what they can do. A combination of pre-existing contracts and commitments, difficulty in changing large systems and problems with multi-department co-ordination means that most changes will be small and isolated, i.e. things where one department or small team can implement the entire change.

[bakuninsbart]

I'm working adjacent to the sustainability space, and I think Goodhart's law applies to a good degree, however a bad measure is often still more useful than no measure at all. It at least enables us to show flaws, develop better indicators and metrics.

When it comes to human rights in the supply chain and environmental impact, there was a complete lack of data in many cases. With the ESG, we see a major shift where companies are now scrambling to gather said data, analyse it and often also publish it.

[raxxorraxor]

> are likely limited in what they can do.

If they aren't suffering under these rules, which will almost be a certainty.

[binary132]

Obviously KPIs should be (and probably are) chosen specifically with this effect in mind.