A new survey of 125 firms by The Conference Board shows that only about half of companies have experienced backlash related to their environmental, social, and governance (ESG) strategies. However, 43 percent of executives expect backlash to increase.

According to the authors, despite the negative connotations, ESG backlash can be a clarifying moment for companies. “It can prompt companies to reevaluate their ESG strategy, priorities, and commitments. This requires companies to engage the board and senior management in a candid discussion of whether the company is still ‘in’ on ESG and multi-stakeholder capitalism and, if so, in what ways.”, researcher Andrew Jones highlights.

The report found that:

• Half of all companies have experienced some form of ESG Backlash, but only 18 percent have been targeted specifically
• 61 percent of companies think ESG Backlash will stay the same or increase over the next two years

Jones concludes that the focus of discussions should be a fact-based evaluation of which ESG issues can contribute significantly to the long-term performance of the company and welfare of the company’s investors, other stakeholders, society at large, and the natural environment: 

“When pulling back on ESG and sustainability investments due to economic or business considerations, it is important to clearly communicate the rationale behind such a move. Otherwise, reduced commitment to ESG may be interpreted as caving into backlash.”, he says.

—

Source: The Conference Board