CEOs say GTFO to ESG

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

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