Is ESG a fad, masquerading as ‘woke’ capitalism? Or is ESG a broad concept that is still evolving, capturing most of the efforts by companies to do the right thing, in the face of climate change, an energy transition, and social issues vexing numerous countries?

Those questions, and myriads more, were on the agenda in May at the Milken Global Conference in Los Angeles and the World Economic Forum in Davos.

Both conferences featured CEOs committed to speaking out as employees and other stakeholders are expecting, and in some cases demanding, of corporate leaders.

But there is growing media commentary that the unstandardized nature of ESG rankings is leading to confusion and cynicism over how corporations are being estimated.

“ESG has become too much of a check-the-box asset class,” said Lady Lynn Forester de Rothschild, whose Coalition for Inclusive Capitalism convenes an influential group of stakeholder-focused chief executives, to the Financial Times.

As trust in governments, the media and other institutions declines, businesses have an even more compelling role to fill the void. That’s certainly the view of most Page members.

“The world expects more of CEOs today than shareholder returns,” reads Page’s “CCO as Pacesetter” report. “For leading CCOs, measurable societal progress is an integral part of competitive differentiation, corporate reputation and brand value.”

During Milken, under the theme, “The Power of Connection,” leaders across multiple organizations spoke about the need for action, on climate as well as diversity, equity and inclusion. 

“If you’re motivated by profit, you need an organization that’s reflective of your community. If you don’t do that, then you’re missing out,” Julie Uhrman, president and co-founder of Angel City football club, told a Milken audience. Larry Culp, CEO of GE, said more broadly, “If we just solve for sustainability, I’m not quite sure how we solve for those other social issues, which are pressing, too.”

Yet ESG critics are out in force.

“ESG is a slippery concept, without widely accepted definitions, criteria and metrics,” the Wall Street Journal said. 

And to quote the FT, “The problem is that ESG — as a whole, and each of the E, S and G individually — is an unholy mess of subjective assessments based on patchy arbitrary data that allows anyone to say they are ESG compliant.”

In Davos, as at Milken, companies whose CCOs are members of Page were in abundance. Inflation and war in Europe overshadowed much of the Davos conversation, particularly on climate.

From semiconductors to supply chains, macroeconomics took the wheel from what has traditionally been a major ESG conversation.

“There are three R words right now:  it’s Russia, it’s recession and it’s rates,” Jane Fraser, CEO of Citigroup said. 

But climate still had its moment, particularly the First Movers Coalition, a group of commitments made by business around renewably-produced raw materials such as green cement, steel and aluminum.

And, the biggest changes from the last in-person conferences in 2020 were the ubiquitous panels/pavilions on crypto/Web 3.0.

Here are five critical takeaways from both conferences that you—and your CEO—should be aware of:

  • Governments are exercising their power and disrupting the business agenda. War, interest rates, and immigration policy are dramatically impacting how business is being done.
  • ESG metrics aside, the energy transition is underway. However fast or slow, there is no going back; companies are setting targets and changing their business models.
  • Financial disruption is real. Cryptocurrencies may be in retreat with a recession on the horizon, but there is an entire generation wanting change in the current model.
  • The pandemic has overhauled talent management. Work from home, flexible schedules, uncapped vacations, and increased pay and benefits are the outcomes of COVID and will change how we work going forward.
  • Companies, and not governments, are still better equipped to enact social change.