An acronym too far

We’ve all seen shady business practices, so of course I don’t object to greater clarity in business and holding executives responsible for their decisions. No one wants another Enron. So why won’t I allow a big fat ESG-approved marker to be stamped on my forehead? Well, my discomfort comes from lumping together so many disparate ideas. How is BREEAM-certifying your entire property portfolio with a minimum rating of ‘Outstanding’ clarifying your corporate structure when it comprises thousands of shell companies, some of which are technically bankrupt and many of which have only ever really existed on paper? And when a corporate executive explains how he came by every single one of his assets down to the last dollar, does this really stop the polar ice caps from melting? But if two good causes weren’t enough, well we just have to throw in a third! So, can someone please explain to me how funding a community centre prevents stock exchange fraud or desertification in the Sahara?

ESG is like corporate wokeism. I mean, most open-minded people would admit that the fact that there is a disproportionate number of black people in American jails most probably reflects some level of institutionalised racism in the US. Similarly, it seems outrageous that women are still being paid significantly less than their male counterparts. And I don’t think anyone would be so contentious as to state that gays and lesbians have an easy life. But lumping these issues together has created a cultural monstrosity that ostracises anyone who dares criticise any of its myriad component parts. Now the woke movement will not contribute to this debate, because it is hell bent on trying to destroy it. I know that this is an extreme analogy and if you want to call me out and say that I am using a strawman argument, I will have to begrudgingly admit that maybe you’re partly right. However, I still stand by my central point. Lumping serious issues together that otherwise have nothing in common can only detract from their individual importance.

There is another issue at stake too and that’s window-dressing. About five or six years ago I was asked to write an article about CSR [or for those who have forgotten the last trendy business acronym – corporate and social responsibility]. I talked to one large developer and they stated that everything they did was done based on their CSR policy and that CSR by definition had to be an integral part of corporate operations at every level. Therefore, I was somewhat shocked when the someone at the next company that I spoke said; “Oh, you have to talk to our marketing department.” Just like with CSR, it is very easy to pay lip-service to ESG. Obviously, some ESG commitments are easier to fulfil than others. So maybe it doesn’t matter so much if we churn out CO2 as though it was our main product, because we financially support several community hospitals and our internal corporate checks put an end to our last little scandal involving the laundering of Russian oligarch wealth. Therefore, although by no means perfectly, we are by and large fulfilling our ESG commitments. No doubt many companies have adopted ESG policies due to pressure from contractors and clients and I cannot deny that this by and large is a good thing. However, when a company argues that ESG is at the core of their business, when it’s well known that their main client had been courting other suppliers with a better track record, their arguments ring a little hollow. One suspects that they have only adopted as much of an ESG strategy as was required not to lose business. Lumping so many issues into ESG gives such slackers unnecessary leverage between those spheres – if we do more of that, we can do less of this.

Again, I have no objection to any of the individual parts of ESG, as we are facing an emergency. The UN’s current goal is for global temperatures to rise by no more than 2°C and little is being done to achieve this. Meanwhile, real estate is responsible for around 40 pct of global emissions. I do understand that much of this figure is due to older properties built before there was any awareness of global warming and that it would be cost-prohibitive to adapt them all properly. But that doesn’t change the fact that we are facing a crisis while bragging about adhering to strict corporate rules – and that seems to miss the point by some distance. For this reason, I have far more respect for companies that declare that this is their environmental policy, this is their corporate policy and this their social policy. To me, lumping all these things together only produces what you might expect: a lumpy, unpalatable mess.