Companies are increasingly avoiding the term "ESG" (Environmental, Social, and Governance) due to political backlash, legal threats, and investor skepticism, though many continue their underlying initiatives under different names. Key points:
- Strategic Changes:
- Companies are rebranding reports and committees (e.g., Coca-Cola changed "Business & ESG" to "Business and Sustainability")
- CEOs are using alternative terms like "responsible business"
- Many firms continue their sustainability commitments but discuss them less publicly
- Wall Street is seeing declining interest in ESG funds
- Driving Factors:
- Political pressure and legal threats
- Increased regulatory scrutiny
- $8.2 billion withdrawn from ESG funds in first 9 months of 2023
- Challenges in measuring social goals
- Supreme Court's affirmative action decision affecting diversity programs
- Current Trends:
- Environmental commitments remain strong, especially regarding climate change
- Only 8% of CEOs are actually reducing ESG programs
- ESG mentions in earnings calls dropped from 155 companies (Q4 2021) to 61 (Q2 2023)
- Companies are focusing on specific, achievable goals rather than broad pronouncements
The shift appears to be more about messaging than abandoning the underlying principles, with companies maintaining their commitments while being more careful about how they communicate them.
Cutter, C., & Glazer, E. (2024, January 9). The latest dirty word in corporate America: ESG. The Wall Street Journal. https://www.wsj.com/business/the-latest-dirty-word-in-corporate-america-esg-9c776003
