THE BURGEONING ESG HUBBUB
Unless you’ve been sleeping under a sustainability rock, you’ve probably noticed lots of ruckus about ESG lately (the rating of corporate “environmental, social, and governance” practices). On one hand, it’s stunning that the once fringe “socially responsible investment” movement has evolved into a framework now applied to 35.9 percent of total assets under management in the US, Canada, Japan, Australasia and Europe at the start of 2020, according to the Global Sustainable Investment Alliance (GSIA). (That’s one source; YMMV.)
Hurrah, right? Well, yes, but…
That anti-capitalist bastion Bloomberg challenged the entire Wall Street Rating apparatus in The ESG Mirage, arguing that investment rating agencies are more in thrall to the rated companies than to the investors and asset managers that are paying for the ratings. (As someone who’s designed large and small sustainability rating systems, I’m the first to admit that it’s a challenging and thankless task, but that doesn’t excuse institutional support for BSAU*.)
Bill Baue and Ralph Thurm and the other “positive mavericks” at r3.0 have been diligently challenging the casual conflation of ESG and sustainability, arguing that (1) they’re not at all equivalent, and (2) ESG is oriented to evaluating business risk, while sustainability is oriented to planetary and societal risk.
Andrew Winston and I spoke about it at last month’s Living Between Worlds* conversation on Can we afford to have a future?, and his subsequent article, What’s Lost When We Talk ‘ESG’ and Not ‘Sustainability garnered more than 300 comments on LinkedIn. (Not views. Comments!)
And from the political right, there’s a growing critique of ESG as a “Trojan horse” for “the values of United Nations bureaucrats and World Economic Forum grandees.” (Elon Musk was, characteristiclly, less diplomatic.)
Joel Makower mapped the controversy more comprehensively and soberly in a three part series this month on GreenBiz.com. He asks whether ESG ratings are “fit for purpose, leading companies and investors to actually move the needle on the planet’s most pressing problems. And whether, as some critics claim, the ratings are more of a marketing vehicle for investment firms to generate high management fees than an actual catalyst of positive change.
Also this week, Grant Harrison of GreenBiz spoke with Gillian Tett, editor-at-large for the Financial Times, and Tariq Fancy, former chief investment officer for sustainable investing at BlackRock (who left quite frustrated with BlackRock’s sustainable investing game), to explore paths to substantive change on ESG issues, asking: “Can a clean and just economy can be successfully built on a neoliberal foundation? What would it take for corporate leadership to do their part in asking market referees to do their job?” I won’t try to summarize that discussion here; better that you read it for yourself. But I will share the response I posted to LinkedIn:
If “Waiting for them to ask to be regulated may unfortunately be a fool’s errand,” and if expecting them to self-reform “against their own financial interests,” where is the leverage, the doorway, the invitation for change?
(I’ve invested my career in uncovering, demonstrating, and delivering the “financial interest” available in doing business as though we belong to the living world—and that work, by my firm and so many others—has had some impact. But for most business “leaders” the data supporting the possibility seems to be so drowned out by the old short-termism story, by the intrinsic market distortions of an ecologically subsidized global economy, by the weird assumption that we can’t afford a future, that some days it’s hard to know where to find the strategic leverage now.)
I take daily comfort and resolve from the incredible (even if inadequate) momentum and innovation we see all around us, and from the playbook—the four billion years of open source R&D—that’s available to all of us. But I have growing doubt that superficial reforms will free us from the structural defects of capital-ism.
Which is why I’m increasingly focusing my own work on generating ecologically-grounded, employee-owned, community-rooted businesses. (More on that soon.)
Where do you find comfort and resolve in facing these challenges?
CHANGE WITHOUT CHANGE
You see, one of the problems with ESG is that it lends itself very readily to “change without change.” (Kind of like with capital-ism, too.)
That’s not inherent in the ESG TLA (three-letter acronym 😉 itself, of course, but in how it’s applied. And, alas, as with most things, it’s applied shallowly—”minimal disruption, please.” It’s our job, as practitioners, to make sure that it’s applied with depth, rigor, and context…to make sure it means something…to make sure it drives change. Meaningful, substantive change.
My Living Between Words zoominar is a monthly conversation exploring how we might do that, about how we might live with grace, dignity, and power in this interregnum between a familiar but vanishing world we that can no longer take for granted and an emerging world that we’re coming to realize—with both terror and adventure—we cannot predict.
I’ve always appreciated Alan Kay’s memorable declaration that “The best way to predict the future is to created it.” But despair seems to be a more widespread stance these days, especially among the young, many of whom seem to have grown up blind to the history of change. (But, as the NY Times told us this morning, “Young Americans Are Stressed. They Are Angry. And They Can Swing Congress.”)
So I’ve invited Joshua Harrison to join me in a freewheeling conversation about despair and history, youth and engagement, a new human relationship with the world, and how change happens, and has in the past. Josh and I have been thinking together every couple of weeks for the last few months, and we thought we’d invite you into that conversation. (Josh designs ecosystem-adaptation projects and immersive environmental experiences at the Center for the Study of the Force Majeure, and “regenerates cities to function as natural ecosystems through green technology” at LeafIsland.org.)
So please join us 12:00pm – 1:30pm PT this Wednesday, May 18 (and every third Wednesday) for a provocative conversation that will hopefully challenge and enrich your life and work. You can pre-register here (Zoom requirement) and watch previous *Living Between Worlds* conversations here. You’ll get a glimpse of the conversations that Natural Logic provokes with our corporate and coaching clients—about facing the underlying challenge:
How will we learn to do business, and everything we do, as though we belonged to the living world?
If these writings and webinars strike a chord with you, perhaps it’s time for us to work together. Here are a few ways that can happen. Perhaps one or more is right for you right now. If so, let me know!
- If you’re reading this, odds are you’re a trimtab. Well, it might be time to engage me as your trimtab! I offer one-on-one, tough-love support for leaders and emerging leaders, to build your effectiveness, power, presence, and peace of mind.
- The new release of the MySustainOnline micro-learning platform—in 100+ languages—goes live *this week,* with 220K users already on board. (Yes, I know I said that last month; software can be funny about time.) If you might be interested in getting every employee in your organization engaged—and knowledgeable— about their role and potential contribution in your organizations sustainability/climate/regeneration future, please contact me to schedule a demo next week.
- Natural Logic doesn’t do peripheral-to-the-business-case CSR or tick-the-box ESG. We develop strategy, design practices, and support implementation to build profit, impact, and meaning—shoulder to shoulder with your teams—grounded in 3.8 billion years of open-source R&D. We help your company commit to and deliver on aggressive, realistic goals—that move us closer to the world we need, faster than we even thought possible, and deliver, in the words of one client, “massive value”. Possibly of interest for your organization? Then let’s talk!
- Bring me in to keynote your next conference or speak to your board or company retreat. (You can watch some of my recent keynotes at my YouTube channel, linked below.)
- Not ready for a contracted engagement? Now you can ask-me-anything—on-demand!
That’s it for now. Hopefully I’ll see you Wednesday on Zoom!
PS: Curious about what else I’m up to? Please visit my new LinkTree lab!
Gil Philip Friend • Trimtab4Trimtabs™
CEO, Natural Logic, Inc. • Founder, Critical Path Capital • Keynote Speaker—Book me now!
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