I intentionally waited to publish this blog, even though I wrote it the morning after the US presidential election results were announced. There were enough immediate articles, news items and posts lamenting the results and wringing hands about the future of ESG/sustainability in the US.
I’m not going to do that. Instead, let’s look practical realities here. Some things will indeed change, yet some will not. For example:
- There will almost certainly be roll backs of EPA regulations. Which ones, when and what that roll back entails – who knows?
- The path for the SEC’s climate disclosure rule, already made difficult by litigation, is probably at a dead end.
- Businesses will continue their ESG/sustainability programs and strategies. This happened during the first Trump administration and corporate investments in ESG/sustainability grew since then. As one example, US automakers retooled their plants years ago for EV manufacturing, investing tens of billions – if not more. They aren’t likely to turn their back on that without doing everything they can to get their ROI. In addition, there is the matter of Elon Musk and the influence/role he may have in new policy development – he won’t shoot himself in the foot.
- The transition economy will continue moving forward, although the pace could slow.
- At the same time, companies may talk less about their sustainability programs and achievements. Greenhushing will grow so companies stay under the radar for backlash.
- Businesses still face legal mandates other than what is imposed under US federal policy (which is minimal anyway): contract terms and conditions, state laws and ESG/sustainability laws in other countries – the EU CSRD being the most significant.
- Public/consumer pressure and reputational concerns related to corporate ESG/sustainability issues may be impacted to an extent, but they aren’t going away.
Don’t expend (waste?) energy fretting the political future. Instead, double down on finding and demonstrating how your work directly contributes business value to the company.
ESG leaders, staff and advisors: Your executives and clients may be unnerved by potential ESG/sustainability uncertainty and hesitant to support related programs/initiatives. Be sensitive to this concern. However, no company pushes back against legally growing revenues or profit, so more than ever it is imperative to show hard-dollar benefits of your efforts. I like this perspective from a Bloomberg article about the knee-jerk reaction in alternative energy stocks caused by the election:
“Fundamentals like revenue and profit outlooks don’t change for many clean energy companies under a Trump presidency.”
The same idea holds true for many industries and companies. Keep focused on the practical, the necessary (compliance mandates) and the dollars – ignore the politics. And accept the idea that you may have to downplay ESG/sustainability attributes for a time.
Our members can learn more about the business value of ESG/sustainability here.
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