Yesterday Fortune offered up an article which highlighted the ESG minefield which companies are attempting to navigate these days. Some companies have begun calling their sustainability effort something other than ESG, hoping to avoid controversy entirely with opportunistic semantics. But as the piece points out, from an implementation perspective they are not backing down at all. Not yet anyway.
And of course they shouldn’t. More to the point, they simply can’t. For those keeping score at home, the days of Friedman’s shareholder primacy are officially behind us. It turns out there are lots of stakeholders who want to be heard and be considered in corporate decision making. That’s a good thing, as corporate identity continues to evolve and companies increasingly acknowledge that they do not operate in a vacuum. Companies both impact and are impacted by the world around them. And an increasing number of people are watching and holding them to that new standard.
That’s all well and good, but Friedman’s disciples remain unmoved and continue to aggressively support the old paradigm. They desperately want to “make corporations great again” by disputing the relationship between profitability and sustainability, ignoring the benefits which companies derive from ecosystem services, and purposefully and relentlessly mischaracterizing what sustainability even means. And as you might have reasonably expected, there is often an underlying political narrative embedded within these criticisms.
Conversely, there are certainly those on the other side of the ledger who feel that companies are moving too slowly in embracing sustainability. The companies which are mostly in the cross-hairs of these critics are in the energy, cement and steel sectors (maybe transportation and construction as well). Without being an apologist for these industries, I would humbly suggest that these are arguably more nuanced matters. Some industries clearly face complex technical hurdles in transitioning into better versions of themselves, and society is not yet able (or willing) to function without these specific goods or services.
As for winning the ESG Battle Royale, perhaps survival may be the best a company can hope for. With jabs coming at you from the left and from the right, it may be best to keep your gloves up and wait for the bell. Ali’s time-tested rope-a-dope might just get you to the end of the round. And if you’re lucky, you may even squeak out a split-decision.