12 Aug What Should We Call It?
Over the last few weeks, I’ve read many articles questioning the appropriateness of the acronym “ESG” — Environmental, Social & Governance. Arguments against the term range from it’s unclear, too broad, divisive, and inconsistently applied to it being a woke, progressive scam. OUCH!!
Is saying Sustainability better? Corporate Impact? Or should we resurrect terms like Corporate Social Responsibility (“CSR”) or Corporate Sustainability?
What's Driving ESG/S Growth?
Regardless of what you call it, the concept – not the term- has evolved into so much more since its inception some 20 years ago. Many factors are driving ESG/S into the mainstream of corporate thinking. Below are a few key forces to consider:
1. Socially Conscious Investors & Employees: An increasing number of investors want to invest in companies whose values align with their values. And, likewise, an increasing number of employees, especially the younger generation, want to work for a company that aligns with their values. A 2020 PWC Survey revealed that “people prefer to support or work for companies that care about the same issues they do, and that 84% are more likely to work for a company that stands up for environmental causes.”
2. Transparency: Enabled by technological advancements, individuals want to know how their money is being invested and social media has helped provide accountability.
3. Reporting and ESG Data: While far from perfect, ESG/S reporting has evolved and is a way to inform investors, stakeholders, and clients about the company’s environmental and social impacts.
4. Diversity, Equity, and Inclusion (“DEI”): The COVID-19 crisis created challenges that brought awareness to social inequalities and called for stronger mandates for equal rights. Alongside the pandemic, the 2020 social justice movement heightened calls for DEI.
What should we call it?
A name is a powerful thing – it helps humans mentally differentiate and order our thinking. And, giving something a name makes it real and tangible.
The uncertainty and turmoil of the last few years have acted as an accelerant to the rising ESG/Sustainability movement. Despite critics and greenwashing, it’s here to stay, and thankfully so given the size and urgency of the problems our world is facing.
Successful ESG/S strategies going forward will not only evaluate and manage risk in the short term but will address opportunities pertaining to a company’s long-term health, prosperity, and value to society. Something this consequential deserves a strong, widely accepted name!
So, what should we call it? I’m still formulating my opinion and I’d love to hear your thoughts. Email me at firstname.lastname@example.org
Latest News: The US Climate Bill
It’s been a big news week for the climate in the United States! The Inflation Reduction Act was approved by the US Senate on August 7 and is considered the largest climate bill in US history to date. The US House of Representatives is expected to vote on the bill by the end of today. And, once passed, it will be sent to President Biden for final signature asap.
There is no such thing as a perfect piece of legislation! But below are some key points regarding climate included in this important piece of legislation:
1. A $369 billion investment toward transitioning to low-carbon energy to help the US get closer to the goal of cutting emissions in half by 2030.
2. Consumer rebates on electric vehicles, energy-efficient household appliances, and solar panels.
3. Federal loans to support manufacturers of solar panels and large batteries.
4. Financial support for farmers who adopt practices that remove carbon from the atmosphere.
5. Fossil fuel concessions, including $20 billion in subsidies and new land for offshore drilling.
Upcoming LinkedIn Lives
- Thursday, August 18th @10 am ET – Accountability. Who owns ESG?
- Thursday, August 25th @10 am ET – Materiality. What’s important?
- Thursday, September 8th @10 am ET (My Birthday!) – Framework. What does success look like?
- Thursday, September 22nd @10 am ET – Data, Measurement & Reporting. What are best practices?
Be sure to connect with me on LinkedIn for additional details. Can’t wait to see everyone!
I look forward to seeing you next week. Have a marvelous summer weekend!
As always, warmly yours
Founder, Faust Global Partners