Last January 17, in United States (US) a group of politicians from 21 states including Texas and Utah have stepped up their criticism of firms that incorporate environmental, social or governance (ESG) goals into their business, arguing that the companies should focus more on investment returns. Here an article from Reuters with more details.
According to GRI, some of the arguments of those opposing ESG being ‘forced upon businesses’ can be summarized as follows:
It’s unconstitutional
ESG politicizes business
Leads to lower returns on investments
That business is there for profits and shareholders, and nothing else.
What has triggered attention in the US is the claim by some lawmakers that asset managers neglect their fiduciary duty to shareholders when making ESG focused decisions, with some politicians claiming ESG poses an “existential threat” to the economy.
ESG is about proper risk management. "You cannot run a successful business in a dysfunctional society". That is how GRI reacts to that.
"ESG can have significant value enhancing or destructive effects on a business, such as those related to climate or social equality, requiring investors to understand the opportunities and trade-offs involved. Regardless of whether risks stem from non-ESG or ESG related topics, this means they need to be disclosed, understood and managed."
Eelco van der Enden, CEO of GRI said: "The simple truth is that sustainability and effective risk management are completely aligned. Responsible stewardship means taking care of the fiduciary duty towards stakeholders, society and the environment. In the long-term, you cannot run a successful company in a dysfunctionality society, or a failing planet. Proportionality in decision making is key. Often it is not ESG that politicizes business, but politicians who politicize ESG.”
Click at the image below for the publication "The GRI Perspective" from January, analysing this and what the 'woke capitalism' debate means for the relevance of sustainability data.
