Simple Explanation (ELI5)

Think of ESG as a school report card: a company can promise top marks, but what matters is what is measured and verified. The study shows that many report cards currently use different criteria and overlook the local area, so common rules and reliable checks are needed.

Key Advantages & Current Limits

🟢 Pros: The framework brings 35 obstacles together into a practical roadmap of 39 recommendations for five actors, supporting more comparable data and genuine community involvement. 🔴 Cons: Mandatory global standards and consistent metrics are still missing; applying the model to SMEs, hard-to-decarbonize sectors, and diverse local contexts will require time, expertise, and independent checks.

Future Outlook & Takeaways

Over the next 3-5 years, aligning standards such as European rules and the ISSB, applying double materiality, and using independent audits could make ESG reports more comparable and greenwashing harder to hide. For citizens, investors, and local communities, this should mean more reliable information that reflects real local impacts.

Why ESG Still Falls Short? Here's a Plan to Fix It

Article

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ESG (Environmental, Social, Governance) is a buzzword for companies aiming to be sustainable. But things aren't perfect. A recent study identified 35 main obstacles, grouped into five areas: integration, assessment, stakeholder engagement, territoriality, and sectorization. These issues make it hard to truly measure companies' impact. To fix this, researchers proposed a new framework with 39 recommendations. The goal? Help companies improve, enhance evaluations, and make sustainability initiatives more comparable. ESG should be a real guide, not just a label. With this plan, we can move closer to a more transparent and responsible future. Companies, rating agencies, and other stakeholders must work together to overcome these challenges. Only then can ESG really make a difference.

Bonus

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The analysis is based on a systematic literature review (SLR), which examined 35 main obstacles. These were organized into five axes: integration (difficulty incorporating ESG into corporate strategies), assessment (lack of standardized metrics), stakeholder engagement (limited collaboration with communities and consumers), territoriality (different regulations by region), and sectorization (different approaches for each sector). The proposed framework includes 39 recommendations targeting five key groups: companies, rating agencies, guideline developers, academia, and other stakeholders. Among the solutions: standardizing metrics, improving transparency, and strengthening collaboration. The goal is to bridge the gap between expectations and actual results, making ESG a concrete tool for sustainability. The research also highlights the persistence of 'decoupling'—the phenomenon where companies improve their ESG scores without achieving meaningful environmental or social outcomes.