By Roy Snell
Douglas Adams, a rather humorous brit, wrote a book called the Hitchhikers Guide to the Galaxy. The main character Arthur, hitchhikes through space, meeting many characters who are trying to find meaning in their lives. Aren’t we all? Coincidently there are many characters in the Environmental, Social, and Governance movement trying to find meaning in their lives. If you enter the ESG craze, you will meet these “ESG people.” Some of these people are a bit terrifying, so the more you know about who they are and what they want, the easier it will be to work with them. Some of these terms are commonly used; I invented a few terms to label ESG folks who have not been named at the time of this writing.
ESG Investors – These folks may be responsible for one of the biggest changes in business history… the implementation of ESG programs in publicly traded companies. They have asked their financial advisors to invest their money (sometimes exclusively) in companies that are more ESG friendly. In my opinion, these investors actions will result in the implementation of ESG programs in non-publicly traded companies… suppliers, partners, etc.
ESG Venture Capital and Private Equity – Unlike ESG Investment types, who are focused on publicly traded companies, VC/PE folks are under no pressure by anyone to embrace ESG. They are doing it on their own to protect and enhance their investments. One client approached us to help with the implementation of their ESG program simply because their private equity investors asked them about the status of their ESG program. A new sub-profession of VC/PE ESG specialists is emerging within the VC/PE world.
ESG Activists – These folks are descendants of corporate protesters. They see the trend to implement ESG programs as an opportunity to get their causes some much needed attention. For example, in the past some, of these people would chain themselves to trees to stop logging. Now it is more common for them to use social media to shame companies into implementing ESG programs or adding their favorite ESG metric to a company’s existing ESG program. Unfortunately, their propensity for dramatic rhetoric has turned off a lot of executives.
ESG Haters – These folks are often found in administrative roles in corporations. In my opinion, they are very bright people who have not yet studied ESG sufficiently. They fear that an ESG program will become political, create financial problems and distract them from their organization’s mission. They don’t see the benefit of an effective ESG program. What they fail to see is that one of the reasons to implement an effective ESG programs is to stop the politicization of ESG programs and maintain the focus of the ESG program to prevent financial ruin or loss of focus.
Stakeholder/Shareholder Capitalists – Are people who use their stake in a company to change and influence behavior. They often use their leverage to promote their ESG related causes.
ESG Rating companies – These folks gather publicly available ESG information on companies and publish that data to help those that want to make ESG decisions (buy products, partner, invest, etc.) ESG rating companies are primarily focused on publicly traded companies. There is a great deal of concern about the completeness of their data.
ESG Professionals – These people are hired by their company to implement and manage an ESG program. As a result of their working on ESG related projects 24/7 they are a good source of accurate information about how ESG works.
ESG Standards Bodies – One of the biggest benefits of an ESG program is that it helps keep the number of ESG metrics to a manageable number. The first step in implementing an ESG program is to get a list of ESG metrics that are relevant to your industry from a respected ESG standards organization such as SASB.
ESG Software Developers – Organizations like the one I work for, Osprey ESG Software, write programs to help with the collection and management of ESG data. ESG software developers will provide a process for the implementation of effective ESG programs.
ESG Greenwasher – These folks’ primary role is to make their company look good. Unfortunately, they have gone a little too far in their effort and have been accused of misleading the public about their organization’s ESG acumen. As organizations hire trained ESG professionals, the greenwashers are often removed from the organization’s ESG key processes.
ESG Regulators – As we speak, countries worldwide are writing ESG regulations to force companies to implement effective ESG programs.
ESG Enforcement Community – As a result of the public outcry over ESG related problems in companies, the enforcement community has focused a great deal of their resources on ESG related infractions. As a result of the addition of new ESG regulations, they will be very busy.
ESG Devotees – These folks are not terribly upset by anything ESG related, they simply want to help when they can. They want to make the world a better place and might even pick their next job based primarily on a company’s commitment to ESG. They like REI (ESG pioneer) even though some are not into outdoor activities. They were early adopters of neighborhood recycling in the 1960s and quite often…. they make very nice neighbors. They are all around us but unnoticeable because they are not screaming or chaining themselves to trees. They are just quietly and collectively… making a huge difference.