By Will Novosedlik

Back in 2004, Marjorie Kelly, author of The Divine Right of Capital – credited with inspiring the creation of the B Corporation movement – wrote in a business ethics piece that 30 years and 112 studies later, it had been proven that CSR goes hand-in-hand with financial outperformance. No longer could companies argue that social responsibility would interfere with profitability.

Most large companies have ESG/DEI strategies. ESG/DEI – what used to be called CSR — reporting has become a standard component of most corporate annual reports. ESG ratings are built into the risk calculations of banks, insurers and other financial institutions. But, recently, there has been pushback. We are seeing brands become weaponized in the culture wars. The brouhaha surrounding Bud Light’s partnership with a trans influencer – one that resulted in a US $27 billion drop in market cap and US $395 million in lost sales – is putting these agendas under pressure.

In a recent GreenBiz article entitled “The first rule of ESG: Don’t Talk About ESG,” sustainability consultant Joel Makower posits that ESG has the power to direct vast sums of money and influence away from fossil fuel companies, human rights violators, child-labor exploiters and others deemed at odds with a fair, just and sustainable economy. However, critics demand that this money should end up in the pockets of shareholders instead.

In an age in which some groups have decided that ESG/DEI efforts are a conspiracy designed to drive down profitability by advancing a woke agenda, are brands retreating from such investments? Not likely, according to PWC, which predicts that ESG-focused institutional investments are predicted to soar 84% to US $33.9 trillion by 2026. Meanwhile, Makower says most companies are staying the course on ESG, but are keeping their heads down.

“If you read a variety of articles in the Washington Post, the New York Times and Forbes, you would be left with the impression that there’s a huge amount of pushback and everything’s on pause,” says Phillip Haid, CEO of Public, a social impact marketing agency and accelerator. “We are not seeing that. Ninety percent of our clients are corporate America and corporate Canada and I have seen zero slow down on their ESG efforts.”

Are some companies cooling themselves in terms of how much they speak about their committments?

“Yes,” says Haid. “But I can show you other ones that are leaning into it more. I think it depends on where you are on the spectrum of advancing your ESG agenda. At one end you have companies who over-index on communication but underdeliver on action versus those that have been very active but quiet about it.” It’s all over the map. But if you read the news, Haid goes on, you’d be left with the impression that everything’s slowing down.

If things are not actually slowing down, are they moving fast enough?

“No,” says Haid. “For instance, we’re obviously not going to hit the 1.5° temperature goal. But we’re moving faster than we have in the previous decade and the one before that.”

So how should brands behave in this fraught environment? Joe Solly, partner with Deloitte’s risk advisory practice and the Ontario leader of their sustainability and climate change practice, points out that anti-woke critics see “woke capitalism” as false advertising – brands latching onto the issues of the day just to sell more stuff.

“Brands need to pause for a moment and ask themselves what they actually stand for, what is their ultimate purpose, why do they exist and what value do they bring to the world?” Solly advises. “Once they clearly define that, then they can run performance off of that. They can run branding off of that. They can address social and environmental issues, but they need to show that they’re living it in their everyday values of their product.”

“I do still think transformation can happen within a system that is premised on profitability, even if it is underlined with greed,” adds Haid. “I do think you can transform that over time, but an immediate, wholesale change is just not feasible. It’s impossible for a CEO to last if she says to her board and shareholders, ‘We’re going to take less profit, but we’re going to do all these good things’.”