Social impact and sustainability work is hard, and it’s only going to get harder. In this moment, only the bold will succeed. Here are some suggestions for how to shore up your strategies to survive today’s culture wars.
Key Takeaways
- The culture wars are coming for Environmental, Social and Governance in 2024. For those who are serious about continuing this work, now is the time to be bold.
- ESG work has a tangible positive impact – not just on people and the planet, but the bottom line.
- To withstand backlash and prevent deprioritisation, ensure your ESG commitments are measurable, adequately resourced and linked directly to your business practices.
As The Wall Street Journal recently proclaimed, ESG is 'the latest dirty word in corporate America'.
Negative rhetoric surrounding ESG (Environmental, Social and Governance) has intensified into a rapidly escalating backlash in 2024. Vocal critics, who say ESG principles have no bearing on business performance, have dubbed it 'woke capitalism', warning of 'ESG cartels' advancing a 'secret liberal political agenda'.
Diversity, equity and inclusion (DEI) initiatives in particular are squarely in the crosshairs of the culture wars, with controversial brand-name boycotts and DEI bans making recent headlines. As a result, many companies are dropping ESG from their lexicon, distancing themselves from DEI, sustainability and social impact programs – or, even worse, decommitting altogether.
For leaders in this space, the work is already hard, and it’s going to get harder. We have a responsibility to do what’s right – not just for society and the planet, but for our businesses, our employees and our investors. We can’t be deterred by political headwinds, no matter how gusty they may get. When others bow to pressure, we have to stand firm in our convictions.
As the Senior Vice President of ESG at Indeed, I’m steeped in this topic every day. However, I recognise that not everyone knows what ESG even means, much less keeps a finger on the pulse of these issues. But as this election year rolls on and the anti-ESG movement gains steam, pretty soon you won’t have a choice.
Here’s what you need to know about ESG in 2024: what it means, what’s behind the current backlash and – if you’re serious about doing this work – how to stand firm in your commitments.
ESG: good for people, the planet and business
ESG is a set of criteria investors use to evaluate how a company’s sustainability and social impact work, as well as the ways in which it operationalises these two pillars, will impact its performance. The 'social impact' aspect of ESG is an umbrella term that also includes the work a company does in the areas of diversity, equity, inclusion and belonging (referred to in its various forms as DEI, D&I, DI&B, DEIB or, as we have dubbed it at Indeed, DEIB+). It may also include responsible AI, or the ethical use of artificial intelligence.
ESG differs from other models, such as corporate social responsibility, because it combines feel-good initiatives with measurable business outcomes: the head and the heart. Diversity hiring practices are inherently good for business since they enable companies to draw from the widest talent pool possible. In addition, today’s consumers support sustainable and ethical products and expect the companies they support to represent these values.
Research shows that ESG positively influences corporate financial performance, benefitting society, the environment, investors and organisations alike. ESG initiatives also appeal to both workers and consumers: A recent study by Ernst & Young found that 73% of Gen Z workers and 68% of millennial workers prefer companies that prioritise DEI, while another study found that around 60% of workers believe a company’s workforce should mirror the diversity of its community.
Business case aside, adopting ESG commitments is the ethical thing to do. This work impacts people’s lives, helping create an environment – in the world and at work – where current and future generations can thrive. It’s about organisations doing their part to make the planet a better place for everyone.
The Rise of the anti-ESG movement and controversy
The core argument against ESG is that something that’s good for the environment and for people can’t be good for business. Opponents have moved beyond rhetoric to action.
More than two-thirds of states proposed anti-ESG legislation in 2023, half of which passed. Proxy season saw a record number of anti-ESG shareholder proposals (though not many survived a vote), and anti-ESG litigation risk is growing.
DEI has experienced particular pushback, especially following the demise of affirmative action nationwide and the banning of DEI programs at public academic institutions in Texas and Florida. And how could we forget the Bud Light boycott following a marketing promotion with transgender influencer Dylan Mulvaney and the Target Pride Month backlash, which impacted the retail chain’s sales, threatened workers’ safety and drew criticism from both sides of the political spectrum?
In this volatile climate, there is a legitimate fear of taking an action that lands your company in the news or the crosshairs of a political debate, alienating employees, clients or consumers. An increasing number of companies are ditching the term 'ESG' altogether, going silent about their sustainability initiatives, rebranding DEI efforts and scaling back efforts to hire a more diverse workforce. The number of job postings for DEI roles on Indeed fell 18% between December 2022 and January 2023, according to internal data, while many Chief Diversity Officers are voluntarily heading for the doors due to burnout and an inhospitable corporate climate.
When times get tough, we see what’s real and what’s not. Business leaders who don’t recognise the connection between ESG and the bottom line decommit from the things that are good for this world. But they are missing the point, as well as valuable opportunities.
It’s imperative that those of us who are truly committed continue the work. With this in mind, here are three simple ways to ensure your programs withstand anti-ESG and DEI opposition – and stay focused on what matters.
How to bolster your ESG programs against backlash
1. Tie your ESG commitments to your business.
If your ESG goals and commitments only exist to 'do good', they will be deprioritised during times of uncertainty or adversity. ESG commitments are only real, lasting and able to withstand scrutiny when they are directly aligned to your mission and business.
At Indeed, we help people get jobs, so our four guiding ESG principles centre on connecting people to better work to create better lives. These principles inform our 2030 ESG commitments, which support a more sustainable environment and a more equitable, inclusive future of work.
Our commitments aren’t just good for society – they are inherently linked to how we do business, which is why ESG remains a priority for our organisation. It’s the intersection of profit and purpose.
2. Make measurable goals, not just programs.
Don't just focus on what matters but on what’s measurable. While we have science-based targets for reducing greenhouse gas (GHG) emissions, there are no widely accepted standardised methods for measuring the success of social impact work. That doesn’t mean it’s not possible to measure this work – just that there are no standard practices across industries. You can still create accountability measures for your organisation to gauge the impact of your initiatives.
When we look at our 2030 ESG goals at Indeed – for example, helping 30 million people facing barriers get hired – that’s a quantitative business outcome that’s directly tied to our specific mission and our technology. We achieve this impact or we don’t. There’s no grey area.
You can't just tell sustainability and social-impact stories based on emotions; they must also be based on data. When you can tell a story of the measurable progress you’ve made, especially when reporting to decision-makers and investors, your ESG commitments are more likely to remain a priority.
3. Budget for what matters.
In this industry, we have a saying: 'Budget over intention'.
In other words, companies that are sincere in their ESG commitments will budget for them. Good intentions aren’t enough. You need to put your money where your mouth is.
This means sufficiently resourcing the areas they want to impact to build out successful programs and processes, as well as teams who will carry out the work. For example, many companies point to employee resource groups (ERGs) as evidence of their DEI initiatives and call it a day.
Your ERGs should be amplifiers of your DEI strategy, not your only strategy. If that’s all you’re budgeting for, that’s not a sincere commitment. You’re not positioning your company to make meaningful change.
Now Is the time to be bold
Making a world of better work isn’t for the faint of heart. But it’s worth it.
If this is real, if this is how you want to do business, then now is the time to be loud about your ESG commitments. Ideally, you wouldn’t have to be. But the reality is that, when you stay quiet, it at best encourages other leaders and organisations to do the same and, at worst, may discourage them from pursuing these commitments in the first place.
You may get both internal and external backlash, but that can also happen if you don't take a stand. You have to decide as a business leader at this moment: What side of history do I want to be on?
