Good morning.
For the last year and a half, I’ve been looking to see the effects that the political pushback against ESG might have on corporate behavior. And to date, I haven’t found much. Companies are certainly being more cautious about speaking out on controversial social and political issues, in hopes of staying out of the political fray. But most of the corporate leaders I speak with remain committed to efforts to address climate change, increase diversity and inclusion, and address social inequities.
Our new poll of Fortune 500 CEOs, however, has given me some second thoughts. Here’s the question we asked:
As you know, there has been significant political pushback against ESG and “woke” capitalism in the past year. Which of the following statements comes closest to reflecting your view of this development?
1. This was a useful correction. Environmental, social and governance (ESG) issues were unduly impacting business decisions.
2. This is an unfortunate development. Business leaders should be encouraged to take into account environmental, social and governance issues in their decision making.
The answers from CEOs were almost evenly split: 48% for No. 1 and 52% for No. 2. That suggests the attacks on ESG from the likes of Florida Gov. Ron DeSantis and the editors of The Wall Street Journal have found their mark. I suspect the 48% crowd is also expressing frustration that activists and regulators have overreached—attacking oil companies for increasing their production in response to the Russian invasion of Ukraine or proposing overly sweeping rules for reporting on “Scope 3” carbon emissions of suppliers and customers. And there’s certainly reason to argue that the acronym “ESG” is a confusing and bureaucratic framework for measuring social impact.
But none of this changes my view that the increased focus on social impact by corporations in recent years has been both a necessary and welcome development. It’s not driven mainly by political calculation or posturing, but rather by increased demands from employees, customers and investors that companies address the fundamental challenges of our society. And the best companies are increasingly finding that doing so is good for their business (and ultimately for their shareholders).
So watch this space. The political environment is certain to get noisier as the next election approaches. But the opportunity for companies to better demonstrate their value to society will grow as well. And my bet is the companies that do that best will be the ones that prevail.
We will release the rest of the results from the Fortune 500 CEO survey over the next few weeks.
More news below.
Alan Murray
@alansmurray
alan.murray@fortune.com
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