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Add ‘corporations labelling any and all initiatives as ESG’ to the list of trends that were hot a few years ago but are officially out in 2024.
Driving the news: Companies are looking to distance themselves from the term ESG — short for environmental, social, and governance — as it’s become a political flashpoint for those who feel companies are doing too much or not enough to meet sustainability goals.
- Instead, companies are pivoting to terms like “responsible business” and removing mentions of ESG from job titles, reports, and committees, per the Wall Street Journal.
- Launches of ESG-focused investment funds also came to an almost complete halt in the second half of last year amid increased scrutiny, per a new Morningstar report.
Yes, but: If companies think that replacing ESG with a term that has less baggage means people will chill out, they could be sorely mistaken. Canada’s Big Five banks were just sued by a climate activist group for alleged misuse of the term “sustainable finance."
Why it matters: Whether they call it “responsible business” or some other jargony name like “dynamic progressive finance” (feel free to use that if you’re a CEO), big companies will keep ESG policies, if only to appease emerging international laws and activist shareholders.
- For example, the EU’s new sustainability disclosure law requires large companies operating in the bloc, including ~1,300 Canadian firms, to report on ESG practices.
Bottom line: Consulting firm Teneo’s annual survey of global CEOs and institutional investors found that 92% plan to continue their ESG pushes in 2024… though they might just have a different name.—QH