Comparative Analysis of ESG Factors in Large Investment Firms Versus Impact-Focused Firms

As environmental concerns become increasingly urgent, investment firms play a growing role in shaping environmental and social outcomes. One prominent way this occurs is through green investing, a type of investing whose reliability relies on companies’ self reported environmental, social and governance (ESG) factors. The concept of green investing has been around for over twenty years, yet its ability to accurately measure an investment firms’ commitment to the environment has been questioned. This paper examines how large investment firms, such as Morgan Stanley and Blackstone, incorporate ESG factors into investment decisions in comparison to smaller impact-focused firms, such as Sonen Capital and Veris Wealth Partners. Through a comparative analysis of the impact of their respective investments, self-reported environmental consciousness and financial scope, this paper finds that ESG factors often serve as risk management tools rather than accurate measures of environmental commitment. These findings suggest that current ESG measures inadequately capture true impact, highlighting the need for a new system to accurately measure these elements in order to guide business and clients to make more informed decisions about who they trust with their investments.