Many of us have tended to view the anti-ESG as a negative development in the ESG/sustainability world, but there is a silver lining to everything. One positive outcome was predicted last week by Elsa Palanza, global head of ESG and sustainability at private equity firm ICG during PEM, a private equity conference running last week in Paris. According to coverage of the event from New Private Markets:
“Anti-ESG sentiment in certain parts of the US is prompting GPs to choose their language very carefully when it comes to sustainability…
‘We have quite a number of LPs from the US,’ said [Palanza]. ‘What [the ESG backlash] is forcing us to do is be very, very clear about what our principles actually are, and ensuring we are communicating those in very distinct terms. That’s really critical here.’
[She] linked the US backlash to a lack of common understanding of terminology.
‘I think the sustainability industry has a language problem. For the longest time, those of us who have been working in this world have had a nice little echo chamber among ourselves,’ she said… However, what was meant to be an ‘acronym that summed up a whole lot of factors very simply into a conceptual idea’ has since been ‘a bit hijacked’ with broad interpretations of what it means.”
Palanza is spot on. Most of the responses I’ve seen to the anti-ESG movement have revolved around finding another phrase to replace “ESG” (with “sustainability” being the most frequent suggestion, even though that has baggage of its own). Even though we all want to find a short cut phrase, focusing on the semantics is an unnecessary distraction and, in my opinion, waste of time. On the other hand, I like Palanza’s point about being clear on companies’ principles which then should transcend any short cut terminology. Last week at our Practical ESG Conference, keynote Ken Pucker used the increasingly common phrase “value, not values.” That is really what we are talking about. If you need help figuring out how to communicate ESG value rather than ESG values, our guidebook Communicating ESG Value is a good place to start.
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