Hearts & Minds: Why ESG is here to stay

When a victorious Donald Trump proclaimed ‘drill, baby, drill’ it appeared to signal the end for ESG. The three letters that have dominated corporate behaviours these past few years seemed doomed. Since then and ahead of today’s inauguration many companies have publicly announced a scaling back of some of their ESG policies. The new President, seemingly, will consign the famous initials to a moment of history. Or will he? Are firms really rowing back? Will in fact ESG remain very much alive?

The answer to those questions in order are no, no and yes. He won’t put ESG in the dump truck; businesses will carry on pretty much as before; and ESG will survive. CEOs, especially those with a high degree of US exposure, may choose to adapt their comms approaches for the new era. It does not pay to rile someone like Trump, nor does anyone wish to be held up to public ridicule and suffer federal retribution, which is his way. In those circumstances, dialing down a tad is entirely understandable.

But deeper, wider perspective is required. ESG is bigger than Donald Trump. It’s about caring for the planet’s future, benefiting society and following best practice –none of which should antagonise anybody. They are indicative of a modern, go-ahead corporation. Employees, investors, consumers, partners - all stakeholders - will continue to demand and look for them, even if the White House won’t. Gen Z expects them as a matter of course.

Just because the US government may be heading in one direction, at least for four years, does not mean the rest of the world will follow suit. ESG regulations will still apply in other countries, especially in the EU but also elsewhere. Likewise, many US states will follow their own laws and practices. Shareholders want it, they see ESG as showing that a company has thought carefully about risk and taken appropriate steps. Similarly, customers and workers wish to know that a business is thinking of them and their future.

Climate change is not going away anytime soon. Extreme weather incidents are becoming more common. They must be accounted for. Companies must mitigate against the likelihood of disaster and its impact. Sustainability and advances in green tech are not simply lofty ideals. They make a business more efficient; they make sense. ESG is vital. It should remain at the forefront of any serious CEO’s strategy and comms.

Chris Blackhurst is one of the UK’s foremost business journalists. He was previously Editor of The Independent and City Editor of the Evening Standard.