Kill the sustainability tax, tout the Green Giants
Three ideas for reclaiming the narrative around E.S.G.
Forgive the delay in sharing this. I’d written some thoughts on reclaiming the ESG narrative back in January when they still felt fresh. Then I was hit with another health challenge that I’m now extremely fortunate to be recovering from (thanks to the incredible people at Lenox Hill Hospital - FYI endocarditis, open heart surgery and brain abscesses are not fun. Ten out of ten do not recommend). Although more analysis of ESG may be the last thing anyone wants to read, I’m sharing my thoughts nonetheless since according to Google Trends, the ESG culture wars did not slow down during my hospital stay.
What’s going on
So: as you are likely well aware, Republican political leaders and their allies have been ramping up attacks on one of their new favorite bogeyman: E.S.G. investing. Alleging the strategy prioritizes ideological concerns over fiduciary duty, anti-ESG leaders are taking steps to curb it, at the state and now federal level. Democrats and business leaders are retaliating with Presidential vetoes and open letters, while endless column inches are devoted to the debate. But there’s no doubt this campaign, which paints E.S.G. investing as part of “Woke Capitalism”, is gaining ground. Larry Fink’s 2023 annual letter to investors was significantly more muted on climate and sustainability than in previous years; Vanguard has left the prominent Net Zero Net Zero Asset Managers (NZAM) initiative; and greenhushing is on the rise.
Why it matters: The barrier of belief
There are many reasons to be concerned. In this post I’m focused one. The attacks have been able to gain traction because of a persistent and widespread belief - that sustainability and E.S.G. are expensive and bad for business, bad for the economy and bad for our pocketbooks. And the attacks risk cementing the same belief they exploit. Until we overturn this “barrier of belief”, attempts to move the world in a more sustainable direction will remain vulnerable to attempts to undermine confidence among shareholders, voters, consumers and other constituencies about the financial prudence of doing so.
What we’re going to do about it
Some suggest rebranding E.S.G. will solve the problem. But this is more than a branding issue. To start, I’m suggesting three communication strategies proponents of E.S.G. and sustainability can deploy to begin shifting perceptions toward a more financially favorable view of the work that must be done in the years ahead. They range from direct to more systemic as the cues creating the belief barrier are both. (The first won’t surprise anyone who knows me). I’m summarizing the strategies here and will then do a deeper dive on each in a mini-series of subsequent posts.
My hope is that, together, we can continue insulating efforts to move the world towards sustainability against attempts to undermine confidence about the financial prudence of doing so. I can’t wait to hear your thoughts.
Three Thoughtstarters
Celebrate the Green Giants: Companies prioritizing sustainability are generating billions more dollars in revenue than those that don't. My book Green Giants: How Smart Companies Turn Sustainability into Billion Dollar Businesses documented the rise of companies generating $1 billion in annual revenue from products and services predicated on sustainability. But since then so much has changed. Today the Green Goldrush is well underway. New Green Giants are emerging. A cadre of Green billionaires is being minted. Green Unicorns are springing up across sectors and across the globe. Let’s amplify this billion-dollar story. (More to come …)
Kill the Sustainability Tax: The price premium on sustainable products (from organic milk to electric vehicles) means every trip to the grocery store reinforces consumer perceptions that sustainability is expensive. This de facto “sustainability tax” must go. Incentives like those offered under the inflation reduction act will help in some sectors. In others, we’ll need to get creative (as Graceann Bennett and I first argued in our research paper Mainstream Green). Shifting the price signal will shift value perceptions, taking the wind out of anti-E.S.G. sails. (More to come…)
Reclaim the Frame: Republican strategists have long been skilled at narrative frames that deposition Democratic agendas. Progressives must get creative in playing the frame game to reclaim the ESG narrative. What’s the counterpoint to “Woke”? I have a few ideas that I’ll share in the weeks ahead, but solving this one will take collaboration. I look forward to sharing thoughtstarters and hearing your ideas. (More to come…)
I look forward to sharing more on these initial ideas in my mini-series of three upcoming posts, and to hearing yours - subscribe now so you don’t miss it. And thanks again to all of you for your patience and support as I work my way back to full strength.
Changing beliefs takes work. Of course this is just one aspect of what it will take to win the ESG and sustainability culture wars. But we neglect the belief barrier at our peril.
Best, F.