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Michael Maslansky, CEO of maslansky+partners, shares new research findings about the shortcomings of the current ESG conversation, and identifies potential solutions. Read the in-depth findings below or download the PDF on the right.
ESG is in the spotlight.
The prevailing narrative suggests “anti-woke” backlash in the US has jeopardized the future of ESG
(environmental, social, governance) investing and corporate ESG in general.
It seems the public has turned against companies that get involved in politics. According to research
we conducted between April and August this year, two-thirds of American voters now say they don’t
want companies taking “political” stands. Nearly half claim they’ve stopped doing business with a
company for supporting a “political agenda” they disagree with.
This pressure is having an impact. Larry Fink notably said he will stop talking about ESG. Major
companies have removed the term from websites, changed the name of reports, and stopped using
the acronym on earnings calls. In our conversations with Fortune 500 companies across industries,
leaders are actively considering changing their strategy. Do they keep investing in “ESG,” risking
serious controversy from the right? Or do they step back from existing commitments, risking
outrage from the left? Unsure what to do, many aren’t doing anything.
So are companies taking the right lessons from recent examples of controversy? Is it actually risky to
reduce your carbon pollution? Should you step back from actions to create better workplaces for
employees? Do Americans really want companies to pursue profit above all, as some critics of ESG
have argued? Or is there a way to navigate this polarization and move forward, while minimizing the
risk of backlash?
What if the most controversial aspect of ESG is simply the language being used to describe it?
Our research separates the substance of ESG from the language of ESG to uncover what is really
driving public sentiment–and what companies can do about it. Rather than drawing broad
conclusions based only on abstract philosophical questions, we evaluate a range of corporate
actions to understand which aspects of ESG carry the most risk and opportunity—and why. We’re
exploring the impact of framing effects and linguistic shifts in approach. From these insights, we
offer a new framework for communicating designed to support companies who want to act on
environmental, social, and governance topics with confidence.
We agree with those (like Larry Fink) who say the term “ESG” is damaged beyond repair. Even in a
sea of corporate jargon, ESG stands out. It’s routinely misunderstood and easily mischaracterized.
With critics driving the debate, terms that are demonized like this rarely make a full recovery.
But the problems go beyond the term itself. Companies need to reevaluate their entire approach to
messaging on environmental and social issues. What was once only of interest to investors, NGOs,
and a subset of curious customers now must speak to a much broader, bipartisan audience. This
change in language is not just semantics. Most Americans today reject the idea of corporations as
leading agents of change.
At the same time, they reject the notion of a single-minded focus on short-term profit. Americans
want businesses to focus on business. But they believe businesses succeed when they operate
responsibly. This premise is the core of our framework for a way forward.
ESG was never meant to be the name of a social movement. It was created as a financial tool for
evaluating long-term business risks. It spawned a whole industry–from fund families to
consultancies to reporting technologies. At many companies, CSR evolved into ESG, and NGOs
embraced the idea of being able to measure and hold companies accountable on a broader set of
issues. What ESG gained in breadth, it lost in definition.
Even today, only half of Americans have heard the term. Only one in five have favorable opinions of
it. As an acronym with no accepted definition and no intuitive associations, the term ESG is empty;
and empty terms make easy targets. When conservative politicians and media railed against the
“radical ESG ideology” or “the President’s ESG agenda” and connected ESG to woke capitalism, they
won the framing war. This may be why 52% of Americans, including 75% of Republicans, feel
companies have “gone too far being woke.”
This negative framing of the term was particularly effective because it connected directly to a
growing feeling among conservatives: they are the victims in a “culture war,” with their views,
values, and traditions being disrespected. In our research, 81% of Republicans said that “the views
of people like me are less respected than in the past.”
To these and other conservatives, companies are not simply taking a stand on an issue. They’re
choosing a side by forcing customers to either accept that position or take their business elsewhere.
In our research, the reaction was consistent. “It’s uncomfortable when brands force things on me,”
said one participant. The overwhelming majority of Republicans (nearly 90%) agree with the
statement that “too many people are trying to force their opinions down other people’s throats.”
This message has certainly been reinforced by critics, who have made it a central theme of their
attacks. But this language of forced morality is also unintentionally embedded in the language used
by companies in support of their ESG efforts.
On issues spanning social justice and DEI to climate change, many companies use moral, valuesladen language. In our narrative testing, phrases like “doing the right thing” and being a “force for good” generated the most intensely positive responses from those who agree with the actions.
These statements were also the most polarizing because they implied that if you disagree with the
actions, you’re “wrong” or “bad.” It should be no surprise that people react negatively to messages
that cast them as the villain.
Some ESG critics have called for companies to rewind the clock and get back to a shareholder-only
approach to business. But our data clearly suggests this is not what the public–on either side–wants.
More than 85% of Democrats and nearly two-thirds of Republicans (64%) agree that “companies
have a responsibility beyond serving shareholders to make a positive impact on the world.” And
people on both sides of the aisle agree on more than one might expect.
In fact, consumers instinctively link responsible practices to business success. When asked to talk
about what makes a successful business, consumers often focus on how companies treat
employees, local communities, and the environment. They believe that the companies which
succeed are the ones that prepare for the future by considering long-term business risks, including
climate risk, and by investing in the technologies of the future, including clean energy.
These concepts make up the core of ESG. When framed in moral terms, these concepts drive
polarization. But when presented as the actions of a responsible business, there is strong support.
It’s time to reframe the conversation in this direction.
Framing matters. By shifting the conversation from ESG to responsible business, we can better
engage consumers across the political spectrum and minimize the risk of controversy.
Where “ESG” is an empty term, “responsible business” feels plainspoken, positive, and profitable.
Most people have no idea what ESG even stands for as an acronym. Even more, a two-word term is
less likely to become an acronym, which means more people will see the phrase itself and
instinctively get it.
When asked to describe what it means to be a “responsible business” based only on the term, even
ESG skeptics describe companies that “respect the environment and make a profit” or “make money
while taking care of customers and employees.” Being “responsible” carries far fewer moral
connotations than ESG or other terms might. It’s naturally less polarizing and integrally connected to
positive business outcomes.
We saw stark differences between perceptions of “ESG” and “responsible business”. Fewer than
three in ten Republicans think that “companies that are committed to ESG” are “more likely to
provide a positive experience for clients and customers,” “more likely to be a good employer,” or
“more likely to succeed financially.” But these numbers more than double when Republicans are
asked about “responsible businesses.” Perceptions among independents jump even more. Among
Democrats, views of ESG are more positive to start, but there is still an eighteen percentage-point
increase in perceptions of responsible businesses over companies committed to ESG.
By changing the language, we can start– or restart-- a more positive discussion on these topics.
Changing the overall term is only the beginning. To communicate as a responsible business,
companies need to go deeper and make three fundamental shifts:
To reduce polarization, the way companies frame their involvement on issues needs to focus less on
aspiration and more on action. Less on political outcomes and more on practical outcomes. And less
on values and more on business value delivered.
ESG, as it was first conceived, was a fundamentally financial framework. The 2004 UN report often
credited as the “mainstream” debut of ESG describes it as a way to build “stronger and more
resilient investment markets, as well as contribute to the sustainable development of societies.”
In this respect, the core philosophy of ESG is still broadly supported. People fundamentally see a link
between businesses operating responsibly and succeeding financially. And they have few problems
with companies managing their natural resources, caring for their employees, and working to appeal
to and embrace a more diverse customer base. The challenge lies in properly framing these actions
to keep that link between responsible business and successful business front and center.
This is a study guide to help chief communication officers (CCOs) and their teams move up the P…