Corporations and government form alliance for environmental, social activism
In 2022, in the midst of a recession, record inflation, and a tumbling stock market, a corporate ideology known by the acronym ESG emerged from obscurity to become a headline topic. It has been called everything from a risk-management tool and a movement for a cleaner, more just world, to a “con,” a “fraud,” and even—in an Elon Musk tweet—“the devil incarnate.”
The term itself is opaque; ESG brings environmental, social, and governance causes together under one umbrella. The environmental component includes things like transitioning from fossil fuels to wind and solar energy, and from gasoline-powered cars to electric vehicles.
The social component includes racial and gender equity, diversity training for employees, economic equity, and gun control. The governance component focus on how companies are run and includes racial and gender quotas for corporate boards, management, and staff, and—in the case of Exxon—putting green energy advocates on the board.
The Origins of ESG Ideology
The ESG movement is a derivative of the United Nations Sustainable Development Goals (SDGs). There are 17 SDGs in all, ranging from “no poverty, zero hunger, and good health” to “responsible consumption and production” and “peaceful and inclusive societies for sustainable development.”
In 2019, the World Economic Forum (WEF), an annual gathering of the world’s most powerful political and corporate leaders in Davos, Switzerland, signed a strategic partnership with the U.N. to advance the SDGs throughout the corporate sector. Led by founder and chairman, Klaus Schwab, the WEF issued the “Davos Manifesto 2020: The Universal Purpose of a Company in the Fourth Industrial Revolution.”
The manifesto declared that “a company is more than an economic unit generating wealth. It fulfills human and societal aspirations as part of the broader social system.”
During the annual meeting, Schwab told the gathered corporate executives and world leaders, “Let’s be clear, the future is not just happening; the future is built by us, by a powerful community here in this room. We have the means to improve the status of the world.”