Joel Makower
March 13, 2023
My column this week focuses on how companies are responding to the growing pushback against companies’ ESG policies and practices. It’s been a tough — and, dare I say, unexpected — development: The good work so many of you are doing has now become fodder for scoring political points among conservative politicians and pundits as “woke,” or worse.
Here’s how it begins. You can read the full story here.
How much should companies cower to the political pushback against all things ESG and, well, “woke”?
I’ve been pondering that question and talking to corporate sustainability professionals and communications experts to understand how companies are traversing this political-cultural moment. Are they pulling back on their sustainability commitments, maintaining their ambition but talking about it less, or damning the torpedoes and going full speed ahead?
The short answer: Companies are staying the course but mostly keeping their heads down.
First, some context. The pushback against companies’ environmental, social and governance strategy is relatively recent and has gained traction quickly, the product of the U.S. far-right wing’s highly effective echo chamber of cable news, podcasts, newsfeeds and social media sites.
ESG, of course, has been around for years and has gained considerable influence in how companies and investors communicate about sustainability and, increasingly, how business customers engage with companies on a range of social and environmental topics. ESG ratings have become mainstream, if flawed, and are now baked into the risk calculations of banks, insurers and other financial institutions. As more companies began to organize around ESG metrics, ESG became a focus of policymakers, too.
Which is where things have heated up. As governments around the world crafted regulations requiring companies to disclose ESG metrics or that embed ESG criteria into procurement, investing and other activities, the topic became a lightning rod for conservatives.
Add to that the far right’s campaign against “woke,” an ill-defined and all-encompassing term that refers to just about any policy or activity that smacks of progressive thinking — concerns such as diversity, equity and inclusion; LGBTQ+ rights; most social and environmental justice issues; environmental protection and especially climate policy; and pretty much every other issue that falls under the ESG umbrella.
“Woke capitalism” has become the epithet of choice to dismiss such activities variously as inappropriate, elitist or disconnected from the business of productivity and profits. As a result, much of the sustainability agenda is now under attack from a small but noisy contingent and its media and political allies.
The pushback against ESG is, no doubt, a direct reflection of its power to redirect vast sums of money and influence away from fossil fuel companies and other polluters, as well as human rights violators, child-labor exploiters and others deemed at odds with a fair, just and sustainable economy. Lobbyists for the aggrieved incumbents, along with their communications arms and political allies, have gone into beast mode to tar everything ESG with a single brush, typically under the guise of companies inappropriately engaging in politics and policy.
One might assume that, as with other cultural wars, this one is destined to quickly fade into the woodwork, the victim of whatever manufactured outrage next dominates the news cycle. Not likely. ESG impacts trillions of dollars of shareholder equity and working capital, not to mention the reputation and other intangibles of thousands of companies, including their ability to access capital, attract talent and compete for government contracts. And that is a threat to those wishing to squeeze every dollar, euro and yuan out of the status quo.
Factions over facts
So, how are companies responding to a world where factions trump facts and where politics has become more performative than productive?
In short, few companies seem to be paring back their ESG commitments and goals, though some have deferred their target dates, seemingly unrelated to the anti-ESG movement and more connected to energy prices, supply chain disruptions and other geopolitical perturbations. But climate action rolls on, largely unabated, and a handful of self-appointed culture warriors isn’t likely to slow things down.
Indeed, U.S. companies have signaled overwhelmingly that they’re planning to comply with the expected climate-risk disclosure requirements being contemplated by the U.S. Securities and Exchange Commission, regardless of when they become law, according to a recent survey by PwC and Workiva of 300 senior-level corporate executives at U.S.-based public companies with at least $500 million in revenues. Many other large companies have ambitious 2030 or 2050 carbon-reduction goals from which they deviate at their own risk.
Still, companies, many already reticent to talk about their sustainability goals and achievements, seem to be further muzzling themselves when it comes to touting such activities.