NEW YORK, Aug. 7, 2023 /PRNewswire/ -- 61 percent of US companies surveyed expect ESG backlash to continue or increase over the next two years, according to a report issued by The Conference Board. The report recommends that corporate boards and management view backlash as an opportunity to clarify their ESG strategy and communications.
The Conference Board also found that most companies are staying the course when it comes to their ESG commitments. Of the firms affected by backlash, just 11% are changing the substance of their ESG programs, while a majority are focusing more on the link between ESG and core business strategy. And nearly half are changing terminology to use terms such as "sustainability."
"ESG backlash is an umbrella term that encompasses a range of positions from healthy skepticism to philosophical opposition to various forms of opportunism," said Paul Washington, Executive Director of The Conference Board ESG Center. "While backlash is often fueled by people's emotions, companies should respond objectively. The most effective response is to ensure the company's ESG positions align with company's core business strategy, are supported by empirical data, and serve the long-term welfare of the company, its stakeholders, and society."
These insights and others are featured in a new report, How Companies Can Address ESG Backlash, developed by The Conference Board in collaboration with the global CEO advisory firm Teneo. The findings come from 1) a roundtable by The Conference Board that brought together more than 200 corporate leaders, and 2) a survey of 125 corporations, about half of which have annual revenue of over $10 billion.
Additional insights from the report include:
The Current State and Sources of ESG Backlash, and What the Future May Hold
Most companies expect a sustained or rising level of ESG backlash over the next two years:
ESG backlash currently emanates from multiple sources:
Companies are concerned about backlash spreading among employees, investors, business partners, consumers, and the media over the next two years:
Strategies Used to Address ESG Backlash, and Reduce the Risk of It in the Future
Turning adversity into an advantage:
Communications and terminology:
"While it may be sensible to adjust terminology, it is important for companies to avoid dramatic or unexplained shifts in how they talk about ESG issues," said Andrew Jones, author of the report and Senior Researcher at The Conference Board ESG Center. "Otherwise, key stakeholders such as investors, employees, and customers may view the company's original commitments and revised statements with skepticism."
Rather than retreating from the conversation, companies should consider ways in which they can still effectively share their ESG story:
"While the political ESG backlash will likely continue throughout the 2024 US Presidential election cycle, many other stakeholders such as institutional investors will continue to press companies on managing material ESG risks," said Matt Filosa, Senior Managing Director at Teneo. "So, it will be imperative for companies to be strategic about how they communicate their ESG strategy."
About The Conference Board
The Conference Board is the member-driven think tank that delivers trusted insights for what's ahead. Founded in 1916, we are a non-partisan, not-for-profit entity holding 501 (c) (3) tax-exempt status in the United States. ConferenceBoard.org
About Teneo
Teneo is a global CEO advisory firm that draws upon its global team and expansive network of senior advisors to help clients solve complex business challenges. Teneo's clients include a significant number of the Fortune 100 and FTSE 100, as well as other corporations, financial institutions, and organizations.
SOURCE The Conference Board
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