ESG: The Culture Wars New Weapon of Choice

Five Best Practices to Keep ESG Out of the Battle

There’s no doubt that the business world has become increasingly politicized in recent years. The growing polarization of American society has infiltrated businesses to the point that remaining neutral or staying quiet are no longer options. In America’s culture wars, businesses are facing pressure from all sides to take a stance on controversial and even non-controversial issues that have now been thrust into the political arena, including Environmental, Social, and Governance (ESG) initiatives.

This set of standards that measures a company’s performance in areas including sustainability, social responsibility, and ethical governance has recently become a target of the culture wars prevalent throughout our country, with some arguing that ESG is being used as a cover for progressive political agendas. Simply, ESG has become another weapon in the unending culture wars through introduced legislation, overturned bills, banned policies, rampant name calling, and Twitter rants. But who is the real victor in this battle?

The Culture Wars and ESG

The term “culture wars” refers to the social and political conflicts that arise over different values, beliefs, and lifestyles in a society. In the United States, the term specifically describes the ongoing political and social divide over issues such as abortion, same-sex marriage, gun control, immigration, religion, and race.

Since the 1960s, when America’s culture wars first sprouted with the civil rights and feminist movements, these conflicts have become increasingly polarized. They have further been amplified by the growth of social media, allowing people to connect regardless of geographic distance and share their views with like-minded individuals instantaneously. Today, the culture wars in America are often characterized by intense debates and disagreements between different groups with strongly held beliefs. They are an unfortunate, but very real reflection of the country’s diverse population and the ongoing struggle to find common ground and shared values in a rapidly changing world.

Now, the culture wars have permeated nearly every aspect of business, and most recently, any and all issues related to ESG. However, in these battles, the foundational benefits of ESG—sustainability, the environment, and diversity and inclusion—are rarely themselves at issue. Rather, like much else in our society, it comes down to which side of the political aisle proponents and opponents find themselves. In a New York Times article, one executive noted, “E.S.G. has been caught in the culture war cross hairs in the U.S. It’s become a liberal versus conservative, Democrat versus Republican issue.” 

Best Practices for Saving ESG from the Culture Wars

As with most battles in the culture wars, the sides are seemingly only interested in winning and in being “right.” No one is looking at the long-term impacts of the war itself. However, as dire as the circumstances may seem, all is not lost when it comes to saving ESG from the constant push and pull of political debates. According to an article in Harvard Business Review, it comes down to managing risks. “[F]or markets to properly allocate capital, investors need companies to disclose material investment risks. ESG is simply about identifying material risk factors that matter to company profitability and shareholder value over time. The key will be returning ESG to its original and narrow intention – as a means for helping companies identify and communicate to investors the material long-term risks they face from ESG-related issues.”

To help do so, businesses may want to consider the following five best practices:

• Objectively Focus on Data and Metrics. 

To help eliminate, or at least avoid, any accusations of political bias, ESG standards should be based on verifiable data. Once the data is compiled, it must also be measured and reported on with objective, transparent metrics. In this way, any ESG initiatives taken will be supported with confirmable facts that are much more difficult to dispute.

• Engage in Constructive Communications.

The keyword here is “constructive.” Far too many either engage in the incessant and childish banter, adding to the destructive rhetoric already running rampant, or don’t say anything at all. And neither will allow the space for progress to be made. Rather, it is important to engage in constructive dialogue with stakeholders, including investors, regulators, and civil society groups, to address concerns and build consensus around ESG standards. Only through transparent and cooperative conversations can a shared understanding of the importance of ESG and its role in promoting long-term sustainability and social responsibility occur.

• Increase Awareness. 

As they say, “knowledge is power.” To that end, leaders can provide educational opportunities for staff and stakeholders to increase awareness about ESG and its benefits, both among businesses and the wider general public. This helps to dispel misconceptions and build support for ESG standards as a means of promoting responsible business practices, not, as others think, as a way to promote a certain political agenda.

• Build Partnerships.

Building partnerships and coalitions across sectors and industries can help promote ESG as a common goal that transcends political and cultural differences. Once again, promoting collaboration and cooperation through strong strategic partnerships is one of the most effective ways to truly move the needle. 

• Focus on the Business Benefits of ESG. 

As with any business initiative or approach, it is important to consistently emphasize the business benefits for ESG. Focusing on the data and results goes beyond political ideology or social responsibility. At the end of the day, ESG helps businesses reduce risk, increase resilience, and create long-term value for stakeholders. And at least logically, there shouldn’t be many business leaders who would argue with those results. By emphasizing the economic benefits of ESG, it is possible to make it a mainstream business practice that is not subject to cultural wars or political divisions.

Through each of these best practices and beyond, it is about separating the business discussions of ESG from the political issues. Simply, it’s about getting back to the business of business and leaving the politics to the politicians.

At The Win Woman, we focus on Environmental, Social, and Governance strategic development and policies for organizations of all sizes and funding opportunities for nonprofits. We work with boards and C-Suite executives to help develop the right solutions for their specific situation in their specific industry. For more information, please contact us. 

Until next time, keep Building Your BADASSERY!