The All-Party Parliamentary Group on ESG (APPG) has published its report of the definition of ESG and warns that confusion about the term risks the UK failing to accurately understand engage with the issues.

The Defining ESG report suggests that clearer rules and definitions are required as the term currently is “beset with confusion”. In particular a precise definition is needed as varied ESG related finance products and ESG ratings become more mainstream. The report provides an overall definition of ESG and set of principles, although not a set of metrics.

The APPG also calls for the Government to launch an ESG strategy to maximise the benefits of ESG practices, while also strengthening the market in ESG-related products and services. The report backs using “relatively light” intervention to steer the adoption of ESG principles and frameworks onto a much stronger course and says that such a strategy would link together the existing policies and strategies such as the Green Finance Strategy, the Net Zero Strategy, The Net Zero Review, the Net Zero Growth Plan, the Energy Security Strategy, the Environmental Improvement Plan, Sustainability Disclosure Requirements, the UK Green Taxonomy, and the Financial Conduct Authority’s sustainable investment labels.

The APPG fears that current understanding of the term is used at times interchangeably with other issues and it can create both ‘mission creep’ and lack of focus. One additional warning APPG notes is that the terminology of ESG should note become another weapon of the Culture Wars that can be seen in the US, where the term has been adopted to mean different things to different groups, or be politicised to the point of meaninglessness.

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