Reckless greenwashing has tarnished faith in the private sector’s role in social issues
AFTER the past month anyone might be forgiven for struggling to remember what last year’s biggest priorities were. While political attention has been whisked away from the stark problems we face, those problems have not helpfully agreed to go on standby. If anything, they have intensified – and nowhere is this more evident than the increasing problem of greenwashing.
We should not doubt the insidious effects. Despite tremendous efforts, meeting the UN’s Sustainable Development Goals by 2030 remains a distant ambition, beset by myriad challenges. We live in a post-pandemic world seemingly on the brink of global war, with supply chains interrupted and a cost of living crisis.
So far, focus on ESG has had tremendous influence on businesses, communities and individual lives. From carbon-intensive firms looking to reposition their business models to entire countries over-reliant on fossil fuels, we have seen sustained efforts at continuous transition. But even those of us who believe passionately in the benefits can see that we are at a crossroads.
We have seen governments row back on commitments – some now claiming gas extraction is “green”, senior business commentators categorising ESG advocates as “nutjobs” and US Senators demanding ESG be “reined in”. And worst of all – against a backdrop of increasing hardship and rising costs – is the spectre of ESG fatigue.
The philosophy behind ESG is simple: in the absence of regulation or intergovernmental co-operation, everyone can influence change to tackle the largest environmental and societal challenges through their choices – as employees, employers, consumers, purchasers, stakeholders, or shareholders. If businesses fear their consumer base will go elsewhere, that will influence their values and drive them to advocate change. If enough individuals, groups and businesses do so; governments have no option but to follow suit. The hope is that where regulation fails, business and society will step in to tackle unfairness.
This may seem naïve, but in truth we can see it happen all the time – more usually in respect to social issues than green ones. In the US, we have recently seen one of the largest reversals of progressive social regulation in a century with the overturning of Roe – with potentially devastating consequences – brought in the name of populist politics. But we have also seen many businesses offering support – financial or otherwise – to those affected by what is seen as very unjust law. Without doubting the values of those businesses, those decisions are clearly influenced by the knowledge that it’s what their consumers, employees and shareholders expect to see.
One might well ask what this has to do with ESG, but the answer is: everything. Not only is it businesses demonstrating social impact, it is also a clear case of customer values driving a ground roots movement that is confronting injustice head-on.
In order for this to work for other issues, such as poverty, discrimination or ecological devastation, trust is crucial. Nothing will accelerate fatigue more fiercely than cynicism. So how do we overcome that ESG Fatigue? How do proponents of ESG ensure that governments don’t row back on their environmental commitment, that lawmakers don’t introduce regressive laws which contravene human rights, that senior voices within large business offer constructive and not destructive challenge to ESG?
Yes, we need better government, with a consistency of message, which role-models behaviour. But we also need globally-recognised, internationally applicable regulation. This is the only way to ensure all entities – businesses, non-profit making organisations and, in particular, government and public bodies – are transparent and accountable for their ESG commitments. This will help end greenwashing and drive real progress.
None of this is new. But government and business commitments to ESG are at such a critical moment. The private sector has made great leaps in driving the ESG agenda, green bonds are launching, social finance is booming, and companies are creating new ways of delivering renewable energy by the day. The risk is that if the public will for change ebbs away, so will their impetus to change