What: MIT Sloan differentiates ESG from sustainability as the former is simply a tracker but does not replace real actions.

Why it is important: MIT Sloan considers that the notion of ESG will be challenged in 2023, for various, and sometimes futile, reasons. But this might not be a bad things and will, for sure, not handicap sustainability as a whole.

MIT Sloan reviews the fact that while ESG became mainstream in 2021, things got bumpier in 2022 and 2023 will not be better. The authors remind that ESG is a way to evaluate and track how a business is affected by environmental and social issues, and that this notion does not replace the notion of sustainability, which is broader.

There are 2 types of backslash against ESG currently taking place:

-    Political tension about the KPIs tracked in ESG reports, especially in the US, with the accusation of making business commitments political (which is a non-sense as any business decision is political by essence),

-    In addition, ESG funds do not outperform anymore the more traditional funds, and this raises questions on the validity of implementing ESG tracking at the core of the business.

Since none of these questions will disappear in 2023, it should be expected that ESG will remain highly challenged during the coming year.

MIT Sloan does not consider that this is a bad thing, as filling in ESG reports is a distraction from actually doing sustainable things and moving the nature of the business.

ESG is going to have a rocky 2023. Sustainability will be just fine