The pushback on ESG has seemingly grown stronger in the US, and it is also taking root and growing in Europe. A recent mid-year review of global ESG activity from Harvard Law School notes that
It appears that the ESG momentum has been slowed by increasing backlash against green policies and climate disclosures in both the U.S. and Europe.
According to the report, in Europe 'scores of major industrial company executives have raised concerns over … the deindustrialization of the European economy'. Concurrently, over 500 companies fell out of compliance this year on their net zero commitments with the Science Based Targets initiative, and a slew of asset managers, most recently banking giant Goldman Sachs, withdrew from Climate Action 100+.
In July, The American Institute for Economic Research launched a detailed report titled The Threats Posed by Environmental, Social, and Governance Policies. The author makes their position clear at the start:
'ESG’s advocates often wrongly conflate financial and nonfinancial objectives in their pursuit of deeply partisan progressive ideology on climate change, pollution, diversity, LGBTQ+ issues, and more.'
The report notes the primary issue is a shift from shareholder primacy to stakeholder primacy, which has '…opened the door for every grievance or concern imaginable to claim stakeholder status and demand the attention, and often action, of corporate leaders.' It’s a long 31-page non-academic report, that focuses in part on the '…tens of thousands of people [who] personally benefit from the ESG agenda…' naming consultants, investment managers and entrepreneurs suppling the market with related products and services, among other targets. In the end it argues for what is essentially happening with the 'ESG movement' –
'…people and firms within a free market can experiment and dissent from prevailing beliefs and practices.'
Isn’t this the very thing people and organizations and firms engaging in the “ESG movement” are doing? It’s a free market, right?
Indeed, the Harvard article notes that 'The backlash … from both multinationals in the energy sector and other industries, has not prevented shareholder support for ESG-related proposals.' Data from market reports suggests that, in the U.S., support for governance and compensation-related proposals … was at 'unseen' levels for the first five months of 2024.
Which means the tactics escalate - some of us as signatories of Climate Action 100+ (CA 100+) recently received letters from the US House Judiciary Committee, which stated they had evidence that antitrust collusion was occurring among CA 100+ signatories, financial institutions and climate activists in violation of US antitrust law. Harvard notes this line of attack as a 'trend and development' further emerging in the second half of 2024 and beyond, but also notes that 'As competition authorities publish more guidance based on practical experience, the guidance should provide increasing certainty on the do’s and don’ts of sustainability collaboration.'
'When you get into a tight place, and everything goes against you till it seems as if you couldn’t hold on a minute longer, never give up then, for that’s just the place and time that the tide'll turn.' - Harriet Beecher Stowe