State and federal policymakers on the right were not targeting corporate sustainability programs when they began lobbing anti-ESG rhetoric and proposed laws into state and national legislatures.
But what began as a campaign against making environmental, social and governance risks and opportunities part of investment decisions predictably spread, just as high-profile battles over drag shows and critical race theory took over the news cycle. Bans against banks and financial services companies that "boycott" fossil fuels, as in Texas Government Code Chapter 809, became a pressure on companies to back away from social impact as well as environmental measures.
This spring, there were increased reports of ESG backlash from shareholders (and their partisan advisers) when they voted on investor proposals at public company annual meetings. About a third of anti-ESG shareholder proposals focused on pressuring companies to stand down on DEI initiatives. Climate also took a hit (although it’s important to note that the data is more complex in that area, where pro-ESG shareholder engagement is advanced). Many of these proposals failed; passing didn’t seem to be the point.
Meanwhile, anecdotal evidence indicates that more companies are "greenhushing," or taking a quieter approach to sustainability communication. A sustainability head for a Fortune 500 red-state-based company, who spoke to me only if I didn’t identify him or his company in this post, confirmed that anti-ESG rhetoric has caused his employer to communicate to the public less often and less comprehensively about sustainability efforts, and we hear similar accounts from members of our GreenBiz Executive Network, a peer learning forum for sustainability executives from large companies.
Another continuing issue potentially abetting the anti-ESG movement is that despite bold public climate goals and other commitments, many of the same companies hold back from advocating for progressive policy, and sometimes actively lobby against those interests. Specifically, some fund PACs that support political candidates who may espouse rhetoric in conflict with a company’s own ESG strategy. Even unintentional firewalls between government affairs and sustainability can cause companies to talk out of both sides of their mouths.
What to do about anti-ESG rhetoric
I asked Deborah McNamara, co-executive director of ClimateVoice, a nonprofit focused on helping climate-positive companies influence policy, what actions a sustainability professional should take to counteract the ESG backlash. In an email, she said anti-ESG rhetoric is "a new form of climate denialism" and exhorted companies with sustainability commitments to, effectively, stay the course and focus on impact. "Employees and sustainability professionals should talk about how ESG investments help them build a better and more profitable business," she said. Companies should "remain focused on aligning all levels of business operations and advocacy with achieving meaningful climate goals, and continue to advocate forcefully and consistently for climate policy progress on all fronts."
The Fortune 500 sustainability head who told me he sees more greenhushing gave an important and reassuring caveat: While his company may not be shouting from the rooftops about ESG, the company’s real-world actions in sustainability have not markedly changed in response to the shift in political tone.
It would be satisfying to raise a fist and advise sustainability professionals to speak out brashly against the backlash and encourage their companies to do the same in the face of political pressure. But not every company has a sustainability head with high company-wide social capital, a mature sustainability program with a proven business case or the executive support to withstand ever stronger political headwinds. Almost 70 percent of the top five earning executives in U.S. S&P 1500 firms are affiliated with the Republican party, which has made opposing ESG one of its calling cards in the current election cycle. Some professionals — and their companies — will simply need to choose between being brave and being safe.
Here are three straightforward ways you can push back against the anti-ESG campaign:
If your company is in a greenhushing phase, use it to your advantage. When you say less, my Fortune 500 source points out, it’s more straightforward to prioritize accuracy and assess any risk that might be associated with your disclosures. Less can be more — especially if you’ve historically not seen eye to eye with your comms colleagues.
Get to know your government affairs department. Do they understand your motivations, and vice versa? What risks are they focused on? If you don’t have a dialogue, start one.
Sign your company on to the Ceres / We Mean Business Coalition-led initiative Freedom to Invest. The campaign mobilizes business and investor interests "around a unified message to policymakers: Protect the Freedom to Invest Responsibly."
Big ambitions? Do all three. But whatever you do, do something.
"It can either be that all of us decide, ‘I have a lot of other work to do to sell my product or service. I don't want to stick my head up. I don't want to [have] what Disney has [experienced] happen to me. I'll let somebody else fight this.’ That's one example," said Steven Rothstein, managing director of the Sustainable Markets Accelerator at Ceres on the main stage at last month’s GreenFin 23 event.
"The other one is that we all decide to get involved. The future of this industry is up to literally the people in this room ... so I hope all of us reach out to people — Democrats, Republicans — all kinds of folks. If everyone here writes a letter to the editor, or does social media or an op-ed, or signs a petition or whatever you want to do — what GreenFin in ’25 will be like will be determined by what each of us do in the coming months."