3 Ways To Navigate The Politicisation Of ESG

Published on:
by KnowESG
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With anti-ESG sentiment being at its highest in the US, businesses around the world are finding themselves in a precarious situation. The public and many government officials alike understand that ESG implementation and regulation need to be enacted and enforced, yet at the same time, if businesses embrace ESG too soon, they could be labelled as “woke” and be financially crippled. After all, the loudest critics of ESG in America hold significant power.

In nations where the politicisation of ESG is rampant, businesses of all sizes need to be able to navigate this landscape carefully. To be able to look after stakeholders while keeping the business operational. Many organisations are already attempting a variety of tactics, such as those that follow.

Reframing ESG As Business Efficiency

Whether it’s business efficiency or something else, reframing ESG as a wise business move is a common tactic large companies have been using and that others can pick up. There are several examples where companies have boosted profits by being more environmentally conscious.

This signals to other companies that focusing on stakeholder interests over shareholder interests is a worthwhile cause. When businesses pay attention to all stakeholders, including customers, employees, suppliers, communities, and shareholders, everyone stands to win.

Even though ESG and sustainability are new concepts to many people, stakeholder capitalism and ESG go hand in hand. What’s more important is that business leaders recognise this and can carefully adopt this ideology into their operations.

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Listening To Stakeholders And Aligning Responses To Values

Since the 1970s, shareholder interest has taken centre stage, and businesses since then have been focusing on delivering results to a small group of individuals. ESG has notably flipped this script and demands that companies pay attention to the larger group. It’s a core component of ESG that businesses need to recognise.

Navigating this landscape is tricky, especially as businesses need to learn as they go. However, one of the ways to make this easier is to listen to individual stakeholders whenever possible.

Businesses are now expected to have more personality. It’s not just for marketing's sake, but for company culture and how a business interacts with customers beyond advertisements. At the same time, there are many thorny issues, and there are bound to be more precarious situations later down the road. As such, businesses need to be careful about how they communicate.

As a general rule, listen to individuals, especially those within the company who want the company to speak out. However, speaking out doesn’t mean picking a side on a particular issue, but rather bringing up company values and how they're connected to a particular social issue. An example is communicating how the company is empowering women in the business in light of Roe v. Wade being overturned.

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Don’t Be Afraid To Get Detailed

ESG is about more than just overt environmental issues, hiring more diverse people and women, or having a positive impact on communities. Each section has its own massive problems, and the solutions are not as simple as they appear. They take a lot of resources, time, and effort.

But looking at each individual element in ESG, it’s hard to find legitimate reasons to not support this cause. Many of the critics have little to say except that the movement is "woke." Whatever that means at this point.

Being able to drill down to the specific issues and communicate in a clear way can help others recognize this as well and remove a lot of the polarisation that this is bringing. ESG, at its core, makes good business sense well beyond saving the planet and improving the quality of life of workers and communities.

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