Marketing is killing ESG. Here’s how we can save it.

Businesses are scrambling to signal compliance with ESG (environmental, social, and governance principles). However, as ESG entrenched itself in the mainstream, it lost much of its original meaning and impact and became more of a marketing tool. Ricardo Vargas writes that the problem may lie in the decoupling of the ‘social’ and ‘governance’ components from ‘environmental’ concerns. He uses the example of a project to rebuild homes in Haiti after the 2010 earthquake to show how all three ESG components can work together. 

 
Of all the things that Tesla founder Elon Musk has done or said in the past year, his declaration on ESG – the acronym for environmental, social and governance – may not have been the most newsworthy. But it is among the most interesting. In May 2022, the world’s most iconic electric vehicle manufacturer was de-listed by S&Ps influential ESG index for “lack of a low-carbon strategy” and violations of “codes of business conduct”, including poor conditions in its California factory and reports of racism. Musk, now the owner of Twitter, tweeted his outrage about being de-listed while Exxon, one of the world’s largest oil and gas producers, was still included. “ESG is a scam,” Musk wrote. “It has been weaponised by phony social justice warriors.”

Without endorsing Musk’s scathing reaction, I believe there is something to what he’s saying. ESG is certainly not a scam. But the more and more we use the term “ESG” to measure and influence the broader impacts of businesses on the planet and the people who live on it, the further we seem to get from its true meaning.

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Πηγή: blogs.lse.ac.uk