If non-ESG-compliant stocks rapidly and massively lose value - financial flows will be diverted to ESG-compliant stocks.

The actual situation is that too much money is and flow to non ESG-compliant stocks. This is a hurdle for sustainable finances.

The following reasons could be the root cause:

a) Investor policy/criteria 

b) ROI higher than for ESG-compliant stocks

c) Easy-of doing / habits

d) Shift in retail investors approach.

e) Govt regulations are getting strict for Non ESG compliant enterprises which is hitting their stock value

f) Change in habits of consumers (sustainable consumption)

g) Govt regulation for sustainable products & manufacturing. Respectively strong emission reduction requirements.

Recommendations:

CSO - Cheif sustainability officer to monitor and alarm to management as this can have large impact on Investor sentiments if stock value drops.

ESG policy framework.

Incentivise ESG compliant stocks (transaction fees, emission fees)