Sustainability
Tenured Harvard Business School professor, now at Oxford University.
On July 27, 2022, The Republican Study Committee published a Memorandum titled “The War on American Energy: Ground Zero” expressing its concern about Environmental, Social, and Governance (ESG). The memo was sent by RSC Chairman Rep. Jim Banks (R-03), Ranking Member of the Small Business Committee Rep. Blaine Luetkemeyer (MO-03)), and Reps. French Hill (AR-02), Andy Barr (KY-06), and Bill Huizenga (MI-02).
The memo starts by explaining that “ESG refers to the progressive scheme through which the Left pressures corporate America to take positions on social and political issues that have nothing to do with business.” In an exclusive piece published on the same date as the memo, Breitbart opined that “ESG funds advance leftist goals such as climate change, and diversity, equity, and inclusion.” I really doubt that leftists have a of goal creating climate change, thereby exacerbating material risk to companies. Rather, they think it’s a problem that needs to be addressed. I suspect that many on the Right recognize it is a problem as well. Honest differences can exist about the best way to address it. Name calling isn’t a way of doing so.
Similarly, diversity, equity, and inclusion (DE&I) has become emblematic of the broader culture war going on in this country. Let’s leave DE&I aside since the focus of the memo is the claim that ESG is going to war with the American energy industry.
The memo further argues that “Companies should focus on maximizing profit for their shareholders, instead of paying for their employees’ travel expenses to get abortions.” Abortion is one of the most polarizing issues in America today and the language in the memo clearly reflects one point of view. But since the focus of the memo is American energy, I’m not sure why it’s mentioned and so I will leave this aside as well. But I do want to note that the Breitbart piece defining ESG links to the CFA Institute. Here is the first sentence in how the Institute defines ESG investing: “Investors are increasingly applying these non-financial factors as part of their analysis process to identify material risks and growth opportunities.” This sounds like smart investing. It also sounds like the Breitbart reporter Sean Moran didn’t bother to read what’s on that link he put in his piece.
Robert G. Eccles of Saïd Business School, University of Oxford is the author of a number of books on integrated reporting, sustainability and the role of business in society. His focus is on sustainability from both a company and investor perspective. Professor Eccles is also involved in a variety of initiatives to embed environmental, social, and governance (ESG) issues in real world decision making. One of these is the Sustainability Accounting Standards Board (SASB), of which he was the founding chairman. In 2018, Professor Eccles was selected by Barron’s as one of the top 20 influencers on ESG investing.
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