‘ESG’ is under attack. Here’s how CEOs can fight back

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Hello and welcome to Modern CEO! I’m Stephanie Mehta, CEO and chief content officer of Mansueto Ventures. Each week this newsletter explores inclusive approaches to leadership drawn from conversations with executives and entrepreneurs, and from the pages of Inc. and Fast CompanySign up to get it yourself every Monday morning.


The anti-ESG movement, which, by most accounts kicked off in 2021 with Texas legislation aimed at protecting the oil and gas industries, is gaining ground. And an in-depth report by Clint Rainey in Fast Company shows that the lawmakers and lobbyists who oppose ESG—shorthand for environmental, social, and governance factors used by executives and investors to measure a company’s impact—are deep-pocketed and sophisticated. To anti-ESG advocates, companies’ focus on societal issues is “not only an assault on the economist Milton Friedman’s doctrine that a corporation’s only obligation is to its shareholders,” Rainey writes. “This is an attempt to redefine and subvert capitalism itself.”

The stand against ESG

By some measures, the anti-ESG forces are succeeding in swaying big company and financial services CEOs. A 2022 KPMG survey of U.S. CEOs found that 59% said they planned to “pause or reconsider” their ESG efforts. More recently, 48% of Fortune 500 CEOs surveyed agreed with a statement characterizing the political pushback on ESG “a useful correction.”

But Richard Edelman, CEO of global communications firm Edelman, says he isn’t seeing a retreat. “I don’t see the evidence of change,” says Edelman, who counsels senior executives, brands, and companies. He says the CEOs he advises are committed to running their businesses and addressing climate change, diversity and inclusion, and income inequality. To Edelman, the business imperative for ESG is clear: “Sixty percent of employees are now values driven,” he says. “You’re not going to get good people to come work for you unless they think your values are aligned with their own and are willing to back those values up with action. Your consumers are also belief driven.”

The bottom line? The bottom line

I asked Edelman what advice he’d offer Larry Fink, the BlackRock CEO whose vocal stance on so-called stakeholder capitalism has made his asset management firm a target of anti-ESG legislation. “BlackRock is a fiduciary,” he says. “They have a responsibility to maximize investor returns, and they have said for many years that climate risk is investment risk. They have access to the most sophisticated tools and data and, by drawing on these and providing information, can demonstrate to Texas or whomever that by having a strong stance on ESG, that they can outperform.”

 (ESG’s overall market performance has been mixed. ESG equity funds outperformed  non-ESG funds in the first quarter of 2023, after dramatically underperforming in 2022, according to Reuters.)

Edelman’s advice to Fink applies to any CEO—public or private—embracing ESG. You need to show your owners why factoring social impact into business will improve profitability and performance. The good news is that institutional and individual investors, even politically conservative ones, generally support ESG goals so long as companies deliver financially.

Share your ESG story

How does your company communicate the business case for ESG? Send your ideas to me at stephaniemehta@mansueto.com, and we’ll share the best in a future newsletter.

Read: R.I.P., ESG?

Why it’s important to understand the anti-ESG movement. Read more



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