Avoiding ESG to please Republicans may not be as tactical and risk-averse as it seems.
In the midst of an anti-ESG political campaign in the US, Martha L. Carter, PhD Matt Filosa, and Orson Porter deliver some pieces of advice to avoid retaliation and green hushing accusations in a Harvard Law School article:
- Take inventory of current ESG disclosures: ESG reports need to be consistent with past statements, but also with competitor's reports as their stakeholders are likely to be similar, if not the same.
- Assess anti-ESG political and activism risks: anti-ESG campaigns are rather targeting major consumer-facing companies at electorally convenient times, which should be taken into account when reacting publicly instead of focusing on the long term.
- Refresh ESG materiality assessment and stakeholder engagement: even though media narrative may change, companies must rely on their own stakeholders to steer their strategy and keep their materiality matrix up to date with their views.
- Continue advancing good governance practices: political campaigns are mostly focusing on environmental and social issues, but companies must not forget to keep high standards regarding the quality of their governance.
- Prepare for tough questions about ESG: no ESG report can satisfy everyone, which means companies must prepare for stakeholders with widely different viewpoints to challenge it no matter what.
Promoting ESG reporting and integration in firms' strategy is not going to get easier over time considering the current political debate.
Corporates should however keep managing their ESG risks and opportunities, as their key stakeholders will eventually need a baseline to engage on these issues in good faith.