Anti-ESG agitators are telling a story that’s both inaccurate and bad for business. And silence won’t deter further attacks — though it certainly could compromise long-term brand value.
It might be tempting for purpose-driven companies to think of the “woke capitalism” smear as just a warmed-over meme — a bit of foam-flecked trolling sure to dissipate as soon as the cloud of performative outrage clears.
But that’s a dangerous dismissal. Right-wing agitation against corporate commitments to improve environmental, social and governance performance already has had a negative effect. The SEC’s long-anticipated rule on disclosing greenhouse gas emissions may be watered down following Republican complaints about “woke capitalism.” And it’s not just bureaucrats who are backing away: BlackRock CEO Larry Fink, not long ago a vocal proponent of stakeholder capitalism, is in full-fledged retreat.
Many corporations seem inclined to follow Fink’s “Don’t say ESG” strategy. Fortune reported that at a recent gathering of 40 ESG executives, most said they are abandoning the term but “doubling down” on ESG-related initiatives. But it’s hard to see how this can work. Anti-ESGers are not just coming for the words; they’re coming for the substance. And that’s a brand threat companies can’t just wait out.
The anti-woke crowd is advocating ‘backward capitalism’
The impulse to duck and cover is understandable — no one wants to present themselves for a pitchforking. But agitators are telling a story that’s both inaccurate and bad for business; and it’s time to talk about the dark, retrograde vision implicit in their critique.
Corporate Political Responsibility in an Environment of Distrust
As US politics become increasingly polarized, brands are left wondering whether and how to engage. How can they simultaneously challenge the status quo, align their influences with brand values and commitments, and avoid the risks of retribution? Join us for an interactive workshop to explore putting the Erb Principles for Corporate Political Responsibility into practice, review new research from Porter Novelli on stakeholder perceptions, and hear how practitioners are using non-partisan principles to connect in this challenging environment — Monday, Oct. 16 at SB'23 San Diego.
Take the anti-woke crusaders’ rhetoric and proscriptions to their logical conclusion and you get a business and finance world clinging to the past, sleeping through the present, and insensible to the future. Call it “backward capitalism.” This is an economy in which fossil fuels rule (Backward capitalists are keen to shore up investment in oil, gas and firearms with anti-ESG state laws — even if they cost taxpayers and retirees hundreds of millions of dollars) — with policies that accelerate climate disaster, poison the air and water, and destroy vital ecosystems; where workers are poorly paid and unprotected (child labor already is making a comeback), and crony-ridden governance structures enable and obscure it all.
The anti-woke contingent isn’t just targeting what they perceive to be a few excesses. They dismiss the mainstream view of ESG assessment as a smart risk-mitigation strategy and flat-out reject the idea that businesses should consider anything but short-term profit. They claim that “woke” corporations are imposing environmental and social initiatives on a society that doesn’t want them. But this is the opposite of the truth: “People say business should do more, not less, to address issues like climate change, economic inequality and workforce reskilling,” the 2023 Edelman Trust Barometer found — echoing years of similar results. Shareholders have driven adoption of ESG reporting, more intentional investments and governance improvements; while employees and customers have spurred action on social and environmental issues.
Stand up for ESG, corporate responsibility and stakeholder capitalism
Ignoring sound business strategy and clear, consistent demands from core stakeholders isn’t typically a pathway to long-term success. And silence won’t deter further attacks — though it certainly could compromise long-term brand value. The rising ranks of workers, entrepreneurs and investors are not going to follow the backward capitalists into the 19th century; they’ll reward brands that can credibly point to a promising future. The best strategy in this contentious moment is not to hide ESG commitments, or even to defend them — but to actively make a positive case for them.
Corporations whose ESG assessments serve primarily to reveal risks and identify potential mitigations should say so, in every context where they mention ESG actions. Those that have made positive social and environmental performance a core aspect of their brand should promote the measurable impact of significant initiatives and make public commitments to continuous improvement. And the activist businesses that have led the B Corp movement and other efforts to use business a force for good should make an affirmative case for fully embracing stakeholder capitalism.
Broadly implemented, a stakeholder approach can produce declining environmental impacts; activate efforts to mitigate climate change and regenerate ecosystems; solidify living wages and hiring practices that draw from and support the whole talent pool; and foster governance that prioritizes transparency, accountability and net-positive impact. That’s a vision for a world most of us want to live in — so, we must stand up for it.