ESG in your lunchbox
At yesterday’s release of the 2021 Edelman Trust Barometer, the CEO of the global communications group, Richard Edelman, pointed to the findings that corporations were trusted more than NGOs and governments and called for business to step up to the plate to help use their power to communicate for good.
Far be it for me, who runs a PR business whose revenues would barely be a rounding error for one of Edelman’s major offices, to disagree with such a luminary in our industry. However, Richard, I don’t see it.
To support Edelman’s proposition, it is true that businesses are becoming more aware of their responsibilities to society. This is largely due to two separate but related pressures.
The first is investor emphasis on ESG (Environmental, Social, Governance), which means companies are being assessed not just on financial metrics, but other ESG measures (though if you investigate you’ll find there’s a lack of agreed standards on ESG, and there’s lots of anomalies).
The second is the push by the so called millennial generation for businesses they deal with – either as a customer or as an employee – to care more about their societal impact.
These twin pressures mean ESG is essentially enlightened self-interest. And in my experience of business for over three decades, self-interest is the most powerful force in business. Companies make decisions to ensure they will thrive – either in the short or long term. Therefore you cannot rely on business to act in the interests of society unless it is in their interests as well.
Two recent issues demonstrate this.
In the US, businesses that were happy to support Donald Trump and his empire while he wielded power are now running to distance themselves from him not that he’s in the last few days of his term of office. Of course they will say that this has been prompted by his actions to stir up insurrection last week, and that may have more than a grain of truth. However, it may be worth asking these corporations who funded Trump and his supporters over the last half a dozen years how they could support him through numerous sexist, racist, anti-disability and other incendiary comments and actions? Where was your ESG then?
In the UK a subsidiary of the FTSE 100 multinational food service group Compass was found to have delivered miserly food parcels to hungry families with contents worth a fraction of the supposed value. If there is any measure of supporting society, short-changing hungry children falls well below the mark. Are the ESG motivated investors going to shun Compass?
Of course, you may say, these are a couple of bad examples when most of business is upping its game. I would counter that business is a wide and diverse universe, which includes some really good actors, and some really bad ones. In general most CEOs want to keep their heads down and not become involved in issues that don’t directly impact their companies.
Asking business to take on the roles performed by governments is simply demanding too much.