Environmental, social and governance (ESG) ratings and sustainability stock indices based on ESG scoring have become the hot new trend among retail and institutional investors, allowing them to evaluate companies based on sustainability and social development instead of simply profits and losses. ESG funds promise long-term growth as governments around the globe promise to scale down emissions to combat climate change.
But in practice, the loose framework for granting high ESG ratings has allowed companies with holistically negative impacts on the environment to populate domestic and global sustainability indices and funds, while expanding production of not-so-sustainable activities such as coal mining, offshore oil drilling and single-use plastics.
Some 16 of the 58 companies listed on the Stock Exchange of Thailand (SET) Thailand Sustainability Index (THSI) derive most of their revenues from fossil fuels or petrochemical products such as plastics.
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