According to a survey of 125 firms by The Conference Board, only about half of companies have experienced backlash related to their environmental, social, and governance (ESG) strategies—and it has generally been mild in intensity. However, 43 percent of executives surveyed expect backlash to increase.
Insights for What’s Ahead
Despite the negative connotations, ESG backlash can be a clarifying moment for companies. It can prompt companies to reevaluate their ESG strategy, priorities, and commitments. This requires companies to engage the board and senior management in a candid discussion of whether the company is still “in” on ESG and multi-stakeholder capitalism and, if so, in what ways.
Leave Emotions at the Door
The focus of those discussions should be a fact-based evaluation of which ESG issues can contribute significantly to the long-term performance of the company and welfare of the company’s investors, other stakeholders, society at large, and the natural environment. When pulling back on ESG and sustainability investments due to economic or business considerations, it is important to clearly communicate the rationale behind such a move. Otherwise, reduced commitment to ESG may be interpreted as caving into backlash.
According to a survey of 125 firms by The Conference Board, only about half of companies have experienced backlash related to their environmental, social, and governance (ESG) strategies—and it has generally been mild in intensity. However, 43 percent of executives surveyed expect backlash to increase.
Insights for What’s Ahead
Despite the negative connotations, ESG backlash can be a clarifying moment for companies. It can prompt companies to reevaluate their ESG strategy, priorities, and commitments. This requires companies to engage the board and senior management in a candid discussion of whether the company is still “in” on ESG and multi-stakeholder capitalism and, if so, in what ways.
Leave Emotions at the Door
The focus of those discussions should be a fact-based evaluation of which ESG issues can contribute significantly to the long-term performance of the company and welfare of the company’s investors, other stakeholders, society at large, and the natural environment. When pulling back on ESG and sustainability investments due to economic or business considerations, it is important to clearly communicate the rationale behind such a move. Otherwise, reduced commitment to ESG may be interpreted as caving into backlash.