I started 2023 by writing: “…[I]n 2023 there’s going to be a lot of head winds and tail winds. You’re going to hear claims that ESG is salvation and that ESG is the devil. …. Be prepared for disruptions and to make adjustments. But focus on what’s important, set a course based on that, and stay on your course (with smart flexibility).”
Even I didn’t anticipate how quickly and brutally the ESG wars would escalate. Every day, there are new examples in the Wall Street Journal, in Congressional committees, even on the front page of the New York Times. LinkedIn is filled with articles proving or disproving the financial merits of ESG.
There are a few basic rules that can help ESG practitioners navigate these wars:
1. If what you are doing makes sense, keep doing it.
Understanding emerging risks is smart, good business. Finding opportunities (often by understanding and addressing those risks faster or better than the competition) is even smarter good business. The climate is changing; the labor force and consumers and even investors are getting more diverse; and investors know that climate and diversity will deeply influence the future value of their investments. Face it and prepare for it.
2. If what you are doing doesn’t make sense, stop doing it.
Don’t wait to be called out on it. Don’t follow the herd if the herd’s going someplace that doesn’t make sense for your business. Don’t do something because it will give you a nice award in DC or Phoenix. Don’t use your corporate time and money to preach to the choir.
3. If you face ESG blowback from your Board or C-Suite, try to differentiate between the “sincere objections” and the “insincere objections.”
There are perfectly good reasons to question much of what’s done in the name of ESG. There is too much reporting; too little substance; too much ‘climate Olympics’ of who can launch the biggest, boldest commitment; too much following the crowd to sign up to the latest improbable pledge. In sales jargon, these questions would be called “sincere objections,” authentic statements of unmet needs. Sincere objections need to be heard, acknowledged and addressed.
There are also what salespeople call “insincere objections.” These are objections which can’t really be satisfied; it wouldn’t make a difference even if you did address them. Many of the insincere objections to ESG are smokescreens for political performance and orchestrated outrage. Others are attacks on any attempt to challenge or limit business. These insincere objections also give permission to those who never really bought into ESG efforts but couldn’t find a strong argument against them.
4. Protect your credibility.
I quoted my colleague Steve Hellem in that earlier 2023 piece: “Credibility and honesty are the ‘north stars’ of ESG progress.” That was good advice before the ESG wars escalated; now, it’s absolutely essential. Promise less and do more. If you’re exaggerating accomplishments, stop. If you’re making promises you can’t keep, stop. If it makes strategic sense for your business to make bold commitments that require unproven technology, admit it. Perhaps belatedly, the greenwash police are out there looking. And if they don’t find you, the SEC just might.
This is all probably going to get worse before it gets better. Don’t expect a sudden outbreak of sanity before the 2024 election is done and settled (and we saw how long that took for the 2020 election). Settle in, focus on what’s important, and get on with your important work.
