I’m an ESG professional and I applaud dissent from Elon Musk and SEC Commissioner Peirce

When people hear that I’m an Environment, Social, and Governance (ESG) expert or learn that I worked in the nonprofit and education social sector earlier in my career, they often make some assumptions.

They might assume I’m a tree-hugging activist, if not a radical socialist, who’s thrilled by everything in the recent SEC proposal on rules for climate related disclosures.

But I am not any of those things. Nor do I embrace all flavor-of-the-moment politics or climate and social regulation.

I do support sound business for economic growth, listening to all stakeholders, and reasonableness. In fact, I welcomed Commissioner Peirce’s dissenting statement on the SEC’s position, as well as Elon Musk’s recent ESG jeers. It is all part of how good ESG policy and practice is made.

Now that the flame wars have settled down a bit and the comment period draws toward a close, I’d like to explain why.

Economic resiliency and growth is the goal.

The purpose of ESG is to drive economic resiliency and growth. That effort requires healthy debate. Policy and practice must be informed by a real spectrum of viewpoints. You can’t learn anything new in an echo chamber.

Local, national, and global policy that advances both business and societal value is the goal. Over the years, I have engaged with many successful bipartisan efforts built on fulfilling this mission, such as:

• Developing legislation on access to affordable childcare to advance workforce growth 
• Advocating at city, county, and state level for affordable housing to maintain and recruit essential workers closer to the businesses and communities that need them
• Pushing for technology infrastructure and tax benefits to help drive an innovation and gig economy forward in the Midwest
• Partnering with the White House and community leaders on concepts for High School to College to Business pipelines of critical STEM talent
• Championing disability legislation to broaden access to services for job development

If we look beyond clickbait headlines, there are things both Musk and Peirce note that are important to debate in good faith in order to develop strong policy and improve ESG practice. Among them: 

• The need to address business value drivers from investors and consumers, not marketing shenanigans
• Ensuring ESG policy, practices, and data needs are material to the business risk and opportunity for Environment, Social and Governance. Not just one factor.
• Addressing consistency in data and disclosures (comparable with XBRL tagging)
• Readiness to address issues within Scope 3 to determine business impact

These are important considerations for everyone invested in our economic future, not just like-minded individuals on the right or left side of the aisle.

ESG needs all stakeholder voices at the table.

When it comes to setting ESG policy and practice, it will take time to build sensible frameworks. It’s good to ask “Where is the line?” and debate about how to set it and actually listen to each other. That’s how you arrive at good decisions.

The best education in my career has been sitting around a table learning as executives, board members, and community leaders grapple with ESG questions like:

• Should a company disinvest or engage as an active investor to improve industries with risky environmental, social, or governance behavior — be a change agent or just walk away?
• Can a foundation or charitable organization transition to ESG investments aligned to its mission? Is there a broad-enough portfolio of funds on the market to maintain a strong return and insulate from risk in the long term? Which is more important: ESG fund alignment of the assets or being financially stable to continue the mission?
• How do we move away from vanity diversity, equity, and inclusion metrics focused in siloed sectors to collaborative short- and long term-goals that financial growth, job creation, and economic security?  
• Is it possible for local businesses of all sizes and local governments to work together to support energy transition and unlock shared financial value?

Often, debating these types of complicated questions among stakeholders with vastly different perspectives leads to a stronger position and outcomes that produce greater business and societal value. To paraphrase Persephoni EVP Tim Mohin’s lesson from our recent ESG Talk interview, “Go out and lose a few arguments.” Don’t assume you already have all the best answers.

If you’d like to hear some great analysis on seeking the best answers for capitalism, society, and ESG, check out our next episode of the ESG Talk podcast, where I chat with Brunswick Partner Dan Lambeth about his impressions of this year’s Annual General Meeting  season and the recent World Economic Forum in Davos. And if you love numbers, I’m slated to appear on the June 21st edition of the Off the Books podcast exploring uncharted territory in ESG accounting and finance impact. Tune in!