ESG ratings: Don’t throw the baby out with the bath water
ESG ratings may be flawed, but they remain the most effective way to measure the ethical behavior of companies, MIT researchers contend.
Faculty
Jason Jay is a Senior Lecturer at the MIT Sloan School of Management and Director of the Sustainability Initiative at MIT Sloan.
He teaches courses on leadership, strategy, and innovation for sustainable business. Jason engages students and alumni in hands-on projects with leading companies and organizations. These efforts help build a community of innovators for sustainability that includes MIT students and alumni, faculty and researchers, with partners in business, government, NGOs, and hybrid organizations.
Jason’s research focuses on how people navigate the tensions inherent in the quest for sustainability, as they simultaneously pursue their own self-interest and the flourishing of human and other life. This work includes deep case studies of cross-sectoral collaboration and hybrid organizations that combine social and business goals. These case studies have been published in the Academy of Management Journal and California Management Review. He also contributes to the MIT Sloan Management Review, Stanford Social Innovation Review, and Greenbiz on the topic of sustainability-oriented innovation (SOI). A key finding of his research is that social innovation occurs through authentic conversations that hold the tension between divergent values and perspectives. With Gabriel Grant, he is the author of Breaking Through Gridlock: The Power of Conversation in a Polarized World.
As a facilitator and consultant, Jason has helped advance sustainability strategy with companies like Biogen, Novartis, and Bose. He is a research partner and facilitator for the EDF Climate Corps and its network of companies. He has contributed to the strategy and curriculum of the Harvard Kennedy School’s Social Innovation and Change Initiative as a faculty affiliate.
Prior to MIT, Jay ran an internet startup, traveled around the world, taught kindergarten in a progressive preschool, and worked as a consultant with Dialogos International, where he consulted on leadership development and organizational change for major international corporations and NGO's including BP and the World Bank.
Jay holds an AB in psychology and a Master's in education from Harvard University, and a PhD in Organization Studies from the MIT Sloan School of Management.
Featured Publication
Breaking Through Gridlock: The Power of Conversation in a Polarized World.Jay, Jason, and Gabriel Grant. Oakland, CA: Berrett-Koehler, 2017.
Featured Publication
"Sustainability-Oriented Innovation: A Bridge to Breakthroughs."Jay, Jason Jesurum, Sergio Gonzalez and Mathew Swibel. BlogMIT Sloan Management Review, November 2015.
Michelfelder, Ingo, Marvin Kant, Sergio Gonzalez, and Jason Jay. Journal of Cleaner Production Vol. 376, (2022): 133983.
Horne, Jannic, Malte Recker, Ingo Michelfelder, Jason Jay, and Jan Kratzer. Journal of Cleaner Production Vol. 242, No. 1 (2020): 118052.
Jay, Jason, Sara Soderstrom, and Gabriel Grant. In Oxford Handbook of Organizational Paradox, 353-372. Oxford, UK: Oxford University Press, 2017.
Jay, Jason. HuffPost, December 15, 2016.
ESG ratings may be flawed, but they remain the most effective way to measure the ethical behavior of companies, MIT researchers contend.
The SEC is proposing a new rule that would require public companies to disclose their emissions data and create more transparency. Industry experts unpack its implications.
"ESG ratings, though flawed, are currently still the best option to measure the ethical behaviour of firms."
"A global community of learners can challenge things and bring in their own perspectives."
"Making claims ratchets up people's expectations, expectations lead to greater scrutiny, that scrutiny can lead to a kind of gotcha phenomenon."
"How do we decide whether a social policy is 'economically relevant' to a company’s business?"
For many companies, the topic of sustainability is at the forefront of business agendas. Consumers and stakeholders are demanding greater accountability from organizations, and the regulatory environment is becoming increasingly stringent. However, pursuing the environmental, social, and governance impacts of business is often met with tension. Leaders now need to manage the misconception within business that meeting sustainability goals means compromising profits.