Plain Speaking Needed To Make Sense of E, S and G

A recent flurry of anti-ESG commentary from columnists at some of the best renowned publications has framed the changing mood around the label “ESG” very nicely: too broad, too ambiguous and too easily used and abused by those that don’t understand it. Yet, the values underpinning ESG are still good. The question, then, is where next do we go? 

The Financial Times suggests we need to look at “Impact Investing”, instead. But transitioning from ESG to Impact does not solve the ambiguity. Succinctly and clearly defining “Impact” will present many of the same problems. 

The Economist suggests a more nuanced approach of uncoupling the E, S and G and boiling the E down to a single metric: emissions. Immediately, one can see that this isn’t quite right either. Emissions is a major issue, but it does not encapsulate urban runoff, waste disposal and other considerations that must be included within E.

Where The Economist looks correct in its suggestion, though, is that at least it is specific. If anything, ESG is failing because it is too broad and so too difficult to mark. Whereas a business leader whose goal is to reduce or eradicate emissions would give everybody, from an uninformed bystander to an informed industry insider, an extremely clear understanding of what they are setting out to achieve.

Perhaps, then, it is time for businesses and business leaders to be more specific about what is actually on their agenda for E, S and G. And perhaps, too, it is time for communicators to embrace the complexity of avoiding labels altogether and help businesses to achieve simplicity and clarity of vision. This generation’s great communications challenge may be that surprisingly difficult task of helping executives speak plainly and say exactly what ESG means to them.