As global elites descend on Davos for the World Economic Forum (WEF), some critics are eager to stress how ESG—once the event’s buzziest of buzzwords—has become passé, or worse (“dead,” “dying,” “beyond redemption“). Following the backlash and division ESG has stirred up in political circles, the theme of this year’s meeting is Rebuilding Trust. Political hostility is zapping “human energy that could otherwise be channeled into shaping a more optimistic future,” writes founder and executive chairman Klaus Schwab, and it’s creating a wave of worldwide angst he calls “unprecedented.” The 2024 agenda has been built around “restor[ing] mutual trust between individuals and nations.”
That includes the obstacles of making social impact and sustainability into business priorities—though maybe not in the way critics have opposed, given their string of victories. Last Friday, before the forum kicked off, the WEF published a report on an initiative it’s launched to address one of the loudest attacks leveled against ESG: Those letters stand for everything, and therefore nothing, which makes it nearly impossible to establish fair, universal metrics.
The organization and the Big Four accounting firms assessed that complaint and developed the Stakeholder Metrics, which was created so the methodology for comparing factors like CO2 emissions, pay equality, and boardroom diversity is more apples-to-apples between different companies, industries, and regions. ESG’s ardent critics will enjoy how few mentions the three-letter acronym got, but won’t like that the Stakeholder Metrics’ focus is precisely the same—just under a refreshed name.
The new common reporting system is not struggling to recruit users, the WEF notes: Some 150 companies have already adopted it. Among them are many businesses that anti-ESGers have previously attacked, such as Bank of America, Mastercard, Salesforce, PayPal, UBS, Nestlé, Unilever, and IBM.
The forum lasts until Friday, and there’s no shortage of scheduled events teeing up discussions of strategy around ESG: how to ramp up sustainability at scale, accelerate inclusive climate action, unlock the benefits of gender parity. The Fast Company Newsroom’s own speaker series is addressing how to make capitalism “more equitable and conscious” in panels with execs from Bridgewater Associates, Citigroup, Verizon, Andreessen Horowitz, and elsewhere.
Their discussions this week might involve companies trading tricks for how to “evolve” their language on ESG practices. Just as DEI departments are suddenly “disappearing” from Corporate America by losing the D, E, and I, ESG is also suffering serious rechristenings. Business watchdogs monitoring the changes have noted the substitution of forgettably average-sounding terms like “responsible business” and “climate risk integration,” that convey their point without raising eyebrows. Coca-Cola recently stripped “ESG” from corporate reports and committee names, the Wall Street Journal reported last week. The goal is now “to be more precise and to set goals that can be achieved,” the story noted. “Saying as little as possible is recommended.”
This tracks with the strategy Wall Street has quietly turned to, too. A survey published last August by Bloomberg found that financial analysts “loathe” the acronym ESG, but say they’ll “continue to incorporate environmental, social, and governance metrics in their business” nonetheless. In fact, they admitted to still “hardwiring it into their work.” Only 18% said they cared about the anti-ESG backlash—efforts that, by then, included attacks by top national Republicans, investment dollars yanked by state treasurers, lawsuits filed by state attorneys general, and a number of statewide blacklists.
“People don’t want to talk about it [the term ‘ESG’] as much because of the news flow from the U.S.,” one London banker explained. “But from an investment perspective and what we do internally, it has never been more important.”