Key Takeaways
- • Global philanthropy could hold as much as $2.4 trillion in assets, yet foundations pursuing responsible investment rely heavily on ESG service providers whose methodologies, authors argue, leave endowments exposed to human rights harms.
- • A 2026 OECD survey of 105 foundations found 45 percent integrated ESG criteria and 33 percent used negative screening, while a 2025 OECD analysis of eight major ratings providers found over 80 percent of human rights metrics came from company self-disclosure.
- • Business and human rights organisations have lost 40 percent of their budget since 2024, according to a global survey by Swedwatch, the European Coalition for Corporate Justice and the Business and Human Rights Centre, with 62 percent saying research and documentation were affected.
- • The authors estimate that just 0.5 percent of global endowment assets could fund independent research and documentation 88 times over, and propose a solidarity levy to channel resources to civil-society-driven due diligence.
- • Foundations are urged to reduce reliance on ESG providers, engage directly with civil society, and pressure asset managers and ESG providers to give more weight to independent media and civil society data.
Summary
An opinion piece published in Alliance magazine, written by Swedwatch program manager Benjamin Claeson and strategic advisor Mathieu Vervynckt, argues that philanthropy cannot invest responsibly unless it also funds accountability mechanisms for corporate conduct. The authors note that global philanthropy could hold as much as $2.4 trillion in assets, but contend that even foundations seeking to use their endowments for good are undermined by a growing network of for-profit ESG service providers, including MSCI, Sustainalytics and S&P Global.
The article describes four common approaches foundations use for responsible investment: negative screening, ESG-criteria portfolio construction, active engagement and shareholder voting, and impact investing. A 2026 OECD survey of 105 foundations found that 45 percent integrated ESG criteria and 33 percent used negative screening. Implementation typically runs through a chain of providers, from ESG research firms to ratings providers, index providers and asset managers. One estimate cited in the piece projects the ESG ratings services market to grow from $12.7 billion in 2026 to $18.9 billion in 2031.
The authors argue that these providers have well-documented methodological flaws and that the market is increasingly dominated by a small oligopoly that remains largely unexamined. Citing a 2025 OECD analysis of eight major ratings providers, they report that some products contain zero human rights-related metrics and that over 80 percent of human rights metrics derive from company self-disclosure. Because independent data often relies on media coverage of NGO investigations, declining investigative capacity can allow controversies to go unrecorded and expire, improving companies' ESG scores. The piece also notes that combined ESG scores can mask severe harms, citing ESG Watch research linking ESG funds to companies with ties to Myanmar's military regime and to oil and mining firms with documented abuses.
The article attributes part of the problem to a funding squeeze in business and human rights work. A global survey by Swedwatch, the European Coalition for Corporate Justice and the Business and Human Rights Centre found these organisations had lost 40 percent of their budgets since 2024, and 62 percent of respondents said research and documentation strategies were affected. The authors argue resources are not scarce: 0.5 percent of global endowment assets, before the documented cuts, would increase foundation grants for independent research 88 times over.
To address these issues, the authors recommend that foundations engage directly with civil society actors and enforce zero-tolerance policies protecting human rights defenders, introduce a solidarity levy channelling resources to independent, worker- and community-driven due diligence, and pressure asset managers and ESG providers to strengthen methodologies and give greater weight to civil society and independent media data. They point to the Wallace Global Fund and Family Office Partners for Change as examples of integrated investment and grantmaking approaches.
The article describes four common approaches foundations use for responsible investment: negative screening, ESG-criteria portfolio construction, active engagement and shareholder voting, and impact investing. A 2026 OECD survey of 105 foundations found that 45 percent integrated ESG criteria and 33 percent used negative screening. Implementation typically runs through a chain of providers, from ESG research firms to ratings providers, index providers and asset managers. One estimate cited in the piece projects the ESG ratings services market to grow from $12.7 billion in 2026 to $18.9 billion in 2031.
The authors argue that these providers have well-documented methodological flaws and that the market is increasingly dominated by a small oligopoly that remains largely unexamined. Citing a 2025 OECD analysis of eight major ratings providers, they report that some products contain zero human rights-related metrics and that over 80 percent of human rights metrics derive from company self-disclosure. Because independent data often relies on media coverage of NGO investigations, declining investigative capacity can allow controversies to go unrecorded and expire, improving companies' ESG scores. The piece also notes that combined ESG scores can mask severe harms, citing ESG Watch research linking ESG funds to companies with ties to Myanmar's military regime and to oil and mining firms with documented abuses.
The article attributes part of the problem to a funding squeeze in business and human rights work. A global survey by Swedwatch, the European Coalition for Corporate Justice and the Business and Human Rights Centre found these organisations had lost 40 percent of their budgets since 2024, and 62 percent of respondents said research and documentation strategies were affected. The authors argue resources are not scarce: 0.5 percent of global endowment assets, before the documented cuts, would increase foundation grants for independent research 88 times over.
To address these issues, the authors recommend that foundations engage directly with civil society actors and enforce zero-tolerance policies protecting human rights defenders, introduce a solidarity levy channelling resources to independent, worker- and community-driven due diligence, and pressure asset managers and ESG providers to strengthen methodologies and give greater weight to civil society and independent media data. They point to the Wallace Global Fund and Family Office Partners for Change as examples of integrated investment and grantmaking approaches.
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