Amidst ESG Backlash, Companies Should (and Are) Staying the Course on Sustainability hero image

Amidst ESG Backlash, Companies Should (and Are) Staying the Course on Sustainability

January 2023 Edition

Welcome to the first edition of Insights+, a new series that will provide in-depth analysis of emerging global economic and social issues that are fundamental to your sustainable business strategy. In each issue, we’ll answer questions on critical topics that will help guide your leadership to mitigate risks while creating strategic advantage.

This first edition is open to all; however, future installments will be a feature available exclusively to member companies. We welcome your feedback, if you have follow-up questions on any of the topics covered, or would like to suggest issues for us to explore in upcoming editions, please feel free to contact us.

The Big Picture

Executive Summary

Recently, a mix of economic and political factors have created a challenging environment for companies committed to just and sustainable business. Business faces a political backlash arising from partisan attacks on so-called “woke capitalism,” particularly in the US, as well as economic concerns related to inflation, potential recession, and the prospects of an acute energy crisis in Europe.

While business, investor, and consumer momentum for just and sustainable business remains strong, this fraught context presents new questions and complexities.

"Let's be clear: Applying the lens of ESG is not a mandate for how to invest. Nor is it an endorsement of a political position or ideology," said CalPERS CEO Marcie Frost. "Those who say otherwise are advocating for investors like CalPERS to put on blinders... to ignore information and data that might otherwise help build on the retirement security of our 2 million members."
Pensions & Investments

Some of the pushback on ESG raises legitimate questions about the gaps between ambition and action and between communications and delivery. Many remain confused about what the dominant terms (“green,” “ESG,” and “sustainable”) mean, particularly with respect to what constitutes a green investment fund. Meanwhile, emerging legal requirements remain fluid and are not fully synchronized between jurisdictions.

When it comes to the anti-ESG movement in the US however, political posturing is a major driver, most often based on flimsy arguments (“ESG will wreck the economy and destroy jobs,” “political correctness run amok”). We should reject these misguided and cynical arguments. Some companies may prefer to stay out of the fray, but they will find that doing so could enable damaging narratives to take hold.

Indeed, this is no time to pull back from just and sustainable business or from arguments that ESG is either too controversial or unaffordable. Commitments to combat the climate crisis, and to build greater social and economic equity, are an investment in resilient business and a thriving economy, both for today and tomorrow.

Smart businesses will not be distracted by short-term turbulence or cynical political attacks. Smart businesses know that their futures will be decided by how well and quickly they transform to net zero, how well they deliver economic opportunity for all, and increasingly how they push back on groundless and discredited efforts to weaponize ESG.

What’s Around the Corner

Emerging Issue 1

Attacks on “Woke Capitalism” Go Global

Political movements globally weaponize attacks on “woke capitalism” to the detriment of companies taking stands on various topics, while political figures leverage attacks on business for their advantage and further divide societies.

Businesses committed to just and sustainable business are targeted as “elites” at odds with, and undermining, the “real” population and “ordinary people.”

Businesses can remain firmly committed to the fundamentals driving their commitments to just and sustainable business and make clear the long-term social, environmental, and economic benefits of their efforts.

Emerging Issue 2

Climate Despair Sparks More Direct Action by Climate Activists

Climate activists continue to escalate demonstrations in major cities from New York to London and take increasingly polarizing and disruptive tactics.

Direct actions will resonate with some citizens and alienate others. Some will perceive businesses to be more problematic and guilty of greenwashing rather than the solution. These deep divisions will render coherent public policy all but impossible.

Businesses need to communicate with humility, accuracy, and resolve to avoid greenwashing concerns, and they need to strengthen their advocacy efforts to promote sustained policy initiatives to speed the energy transition.

Coming Soon

In the wake of Roe v. Wade’s fall, the Center for Business and Social Justice provides guidance for companies on addressing this ongoing public health crisis.

The next Insights+ will dive into the implications of the Global Biodiversity Framework for Business following on from COP15.

Also coming soon: the latest on the arrival of new SEC regulations, and the adoption of the ISSB framework in CDP reports.

Our ESG Experts

BSR's ESG team brings a depth of experience and knowledge to your sustainability strategy.

Aron Cramer portrait

Aron Cramer

President and CEO

San Francisco

Christine Diamente portrait

Christine Diamente

Managing Director, Transformation


David Korngold portrait

David Korngold

Director, Transformation

New York

Stay focused on sustainability as a driver of business value, innovation, and resilience.

Contact Us