Navigating the ESG backlash

Not left or right, but right for business

Beneath the surface of a noisy debate, the transition to a sustainable economy is entering a phase of realism. Having picked the low hanging fruits, companies need to align their ambition with external realities that might not allow them to move as fast as previously expected. When balancing targets with near-term challenges, companies can get caught in the crossfire of polarized debates, especially if they operate in different regions. The following three steps can help corporates to define their core point of view, balance conflicting demands and maintain stakeholder trust:

1. Understand

1. Understand where ESG competes in your markets with other societal or political priorities such as cost competitiveness, digitalization/AI or escalating trade conflicts.
2. But also find out where overlapping interests are and how stakeholders can concretely benefit from your sustainability and DEI activities. The “art” will be to turn competing goals into complementary benefits for multiple stakeholders.

2. Position

1. Form a core point of view on the business rationale for environmental and societal priorities. Companies that have deeply integrated ESG into their business will find it easier to credibly explain the business benefits, compared to companies that see ESG as a compliance obligation or an ideological imperative.
2. Link ESG programmes to the other important issues of our time, such as economic growth, job creation, security or innovation. Storylines focusing on “saving the climate” or “being inclusive” will no longer resonate easily or broadly.

3. Engage

1. Work with your key stakeholders, especially your customers, suppliers, employees, politicians and civil society to demonstrate that business is cooperating for the common good.
2. Advocate for an enabling policy framework to show that you are engaging with the whole system.
3. Tailor your messages to each stakeholder group, focusing on the specific benefits you bring to that group through sustainability and DEI, such as safeguarding supply chains, securing future proof jobs for employees or delivering innovation for clients.

In a highly polarized debate, sustainability and DEI positioning has become more complex. Defining your core point of view, articulating why your actions are critical to business growth, while highlighting benefits to multiple stakeholders, will reduce the risk of future criticism and help to be better prepared when it comes.