The JUST Report: The ESG Shakeout Is Not as Simple as You Think

The ESG shakeout currently working its way through corporate America is taking some interesting twists and turns. To be sure, many corporations and investors are pulling back from embracing the term in public. Reports of companies removing the term “ESG” from their websites or distancing themselves from ESG are widespread. 

My discussions with executives suggest that many are also rethinking their approaches internally too. A survey of 300 Bloomberg terminal users this week suggests the same, finding that 67% said their companies “will stop saying ‘ESG’ but keep doing it.”

Some of this may be due to continued pressure from stakeholders. A new Weber Shandwick survey out last week found that 84% of employees are satisfied with their jobs at companies where leaders speak up about critical events and issues, and that consumers are rejecting the anti-woke movement to demand CEOs speak out on important social issues. Surprising perhaps, given all the push back, but nothing intrinsically new.

Mostly though, I think companies’ ongoing efforts to address business-critical environmental and social issues are driven by the age-old desire to improve performance and create value. 

The opening of JUST’s Corporate Data Review this week will provide an interesting yardstick. This is the moment in our process when the companies we track see all the data we’ve collected and modeled this year relating to their performance across the 236 data points that drive our Rankings. They interact with our team, seek clarification on methodological issues, submit suggestions for revisions, and in many cases direct us to new data disclosures.

A frenetic period for our hard-working JUST team, yes, but it’s also a barometer of how engaged companies are, both with us and the underlying issues. As our Chart of the Week below shows, in 2016, for our first-ever Rankings, 21 companies reviewed their data. Last year, despite growing anti-ESG and “woke” corporate backlash, we hit a record 350. And only last week we had over 388 registrants across nearly 300 companies for our annual preview webinar, another record – up 38% from last year. All signals point to companies becoming more interested in just leadership this year, not less. We’ll keep you posted.   

Be well, 

Martin

JUST IN THE NEWS

Martin recently sat down with Jamie MacDonald to discuss “Can Capitalism Be Just?” as part the ongoing FTSE Russell Convenes series. In the interview Martin talks about what he feels to be the real drivers of major social and cultural change, and the shift he is seeing in public opinion regarding the role of business in society today. He shares his views on how the private sector could better address societal challenges and capitalism be “shaken up” to get money flowing in the right directions. He also explains how JUST tracks and measures corporate stakeholder performance and provides incentives for businesses to drive change. Watch the video discussion here, or listen to the longer-form podcast. 

QUOTE OF THE WEEK

“Every emerging technology comes with benefits and risks. AI is no different, but the stakes definitely feel higher because AI, and especially generative AI, has such massive potential. 

I would suggest that CEOs and leaders who are looking to integrate AI into their products or workflows first anchor themselves to their first principles as leaders. From there, deeply understand both the problems you are trying to solve, and the tools available to help you address them.”  

• Cara Brennan Allamano, Chief People Officer at Lattice speaks with JUST on how leaders should approach artificial intelligence. 

JUST AI

The Wall Street Journal highlights the spike in high paying, AI-specific job listings. Netflix and Walmart are among the companies looking to hire specialists and compensate them with mid-to-high six-figure salaries. 

IBM expects to replace 30% of its non-customer-facing roles with AI in the next five years, cutting nearly 8,000 jobs, with back-office functions, specifically HR, getting hit first. 

Rolling Stone writes about a group of female scientists who are leading an effort to make sure AI systems are trained on unbiased data sets so they do not continue to reinforce destructive stereotypes and perpetuate discrimination.  

MUST READS

ESG is losing prominence as more companies scrub the term from their vocabulary, including McDonald’s as a recent example. A survey of roughly 300 Bloomberg terminal users also said that two-thirds would stop saying “ESG,” but would continue to incorporate environmental, social, and governance metrics in their business, with many seeing its importance at an all-time high. Bloomberg has the story. 

HR Dive talks about how CEOs are seeing company culture as the path toward increased financial performance and productivity. In a new survey from Heidrick & Struggles, 71% of CEOs see culture as a key driver of financial performance, 44 percentage points higher than two years ago.

Starbucks wins a lawsuit aiming to diminish its DEI initiatives. The plaintiff argued that the coffee maker was in violation of its fiduciary duty to shareholders by supporting corporate diversity policies.

Apple has spent $1.5 billion of the $2.5 billion it pledged to address the affordable housing crisis in California. Fast Company tracks how the money has been used so far and highlights the successes and other projects in development. 

Vox explores why the American public is unhappy with the economy even as many key measures signify a strong financial picture. Purchasing power appears to be the biggest concern.  

CNBC reports on a new survey from Envoy, which found that 80% of bosses regret their return-to-office plans and wish they’d taken employee data into account rather than relying on the opinions of executives. 

CHART OF THE WEEK:

As we begin this year’s Corporate Data Review period, we look back on our seven years of Rankings, beginning in 2016 with just 21 companies engaging, through 2022 with a record 350 companies reviewing data through our Corporate Portal. Following a recent webinar that registered 388 participants across 300 companies, we’re looking forward to engaging closely with corporate leaders in the weeks to come. After the 2023 Data Review period closes, we’ll report back with this year’s numbers.