The Right-Wing Rage Against ESG
Meanwhile, Private Equity Increases Focus on ESG
Stakeholder Capitalism on the Agenda at Two Leading Business Events
Here’s a summary of news about Stakeholder Capitalism and Human Capital over the last few weeks.
A Wall Street Journal editorial echoes calls from governors in Texas, Florida, and Louisiana among other states to forbid investments in any ESG-oriented funds. In the meantime, according to Greenbiz, private equity demand for experts in ESG has created a talent war due to a lack of trained executives. And, despite tepid coverage of the topic of Stakeholder Capitalism in the media on the third anniversary of the Business Roundtable pronouncement that suddenly put the spotlight on this decades-old field, the topic has made it on to the agendas of two high-level business conferences being held shortly in New York City.
In a recent Wall Street Journal editorial, successful healthcare entrepreneur Vivek Ramaswamy writes: “Chevron’s board should publicly commit to evaluating all projects on financially measurable return on investment without regard to extralegal social pressure.” However, the article doesn’t explain by what standards ROI should be measured or for whom: investors who want the highest possible short-term return by extracting wealth wherever possible from the earth or investors who want sustainable long-term returns based on creating wealth with minimal risk?
Nor does he propose a specific time frame for measuring this ROI. Does the return on investment have to be in three months, six months, five years? And, at what cost? Can it be at the expense of risking worker safety, consumer health, regulatory challenges, or long-term litigation risks, like the billions BP shareholders are paying for a super fund site in our town created 30 years ago?
In the meantime, Republic governors in states like Texas, Florida, Louisiana and others are proposing placing restraints on the investment of public pension funds in ESG-oriented funds.
What if ESG-oriented companies generally outperform Shareholder-focused companies as these multiple studies indicate, because they have higher levels of customer, employee, distribution and channel partner engagement and community support. Should pension fund managers be banned from investing in them? What about the considerable evidence that ESG-oriented companies generally outperform Shareholder Capitalists because they lower costs and risks because of higher customer loyalty, employee engagement, and commitment from distribution and supply chain partners, and communities.
According this article in Greenbiz by Grant Harrison, “A major opportunity sits at the intersection of private equity and the ESG profession — right?”
He writes: “Private equity’s primary purpose is clear: to achieve alpha for super-rich individuals who can afford super-steep private equity fund minimums and for institutional investors such as pension funds, endowments, and insurance companies. But this opaque asset class has recently made a significant splash in the world of ESG and thus the world of ESG talent.”
He continues, “A wave of high-profile ESG talent has entered the space over the past few years — think Sustainability Accounting Standards Board founder and former CEO Jean Rogers’ transition to lead ESG at Blackstone last year or Microsoft’s chief environmental officer Lucas Joppa’s move to an as-of-yet unnamed private equity firm in late July.”
Since the leveraged buyout boom of the 1980s, private equity has been seen as more of a "greed is good" corner of financial services than anything like "green is good." And, with the current climate-focused epoch in investing largely characterized by a push for public market ESG disclosure, private markets have been framed as a place where dirty assets can seek shelter from scrutiny.
Harrison writes that the “ESG talent war can be characterized as an all-hands-on-deck situation with too few skilled hands and lots of deck to manage. Weeks out from the start of fourth quarter of 2022, hands are still in short supply while more ships are setting sail — including those navigating private market waters.”
While Harrison’s report focuses mostly on the environmental side, the private equity company KKR is support Ownership Works, a not-for-profit “organization that partners with companies and investors to provide all employees with the opportunity to build wealth at work.”
There is little sign that the concept of Stakeholder Capitalism has gone viral, but it has made it on to the agendas as a few top events this fall, at least based on the level of speakers.
Alan Murray, Fortune magazine publisher and Stakeholder Capitalism Advocate, will speak at the upcoming TriNet People Force Conference, Sept. 13-15 in New York, themed: “Passion, purpose, and perseverance,” focusing on the SMB (Small- to medium-size business) market. The home page asks: “Can Passion fuel your business growth? How is your success tied to Purpose? Is Perseverance possible now?” Murray speaks on “Tomorrow’s Capitalist and Searching for the Soul of Business,” and there is a program on the employee experience.
At the Fast Company Innovation Festival, Sept. 19-22 in New York City Dan Schulman, President and CEO, PayPal will speak “In Defense of Stakeholder Capitalism.” Other sessions focus on “What it Takes to Create High-Impact ESG Initiatives,” and “Employees Strike Back: A Look at the New Worker Moment,” and “Beyond Burnout: Why Are So Many People Unhappy at Work?”
Master the “S” of Environmental, Social, Governance (ESG), A.k.a. Stakeholder Capitalism
The Enterprise Engagement Alliance at TheEEA.org is the world’s first and only organization that focuses on outreach, certification and training, and advisory services to help organizations achieve their goals by fostering the proactive involvement of all stakeholders. This includes customers, employees, distribution and supply chain partners, and communities, or anyone connected to an organization’s success.
Training and Thought Leadership
- Founded in 2008, the Enterprise Engagement Alliance provides outreach, learning and certification in Enterprise Engagement, an implementation process for the “S” or Social of Stakeholder Capitalism and Human Capital Management and measurement of engagement across the organization.
- The Enterprise Engagement Alliance provides a training and certification program for business leaders, practitioners, and solution providers, as well as executive briefings and human capital gap analyses for senior leaders.
- The EEA produces an education program for CFOs for the CFO.University training program on Human Capital Management.
- Join the EEA to become a leader in the implementation of the “S” of ESG and Stakeholder Capitalism.
Engagement Digital Media and Marketplaces
- The ESM information portal and The Enterprise Engagement Advisors Network solution provider marketplace cover all aspects of stakeholder engagement, and the EEA information library lists dozens of resources.
- The RRN information portal and Brand Media Coalition marketplace address the use of brands for gifting, incentives, recognition, and promotions. The BMC information library provides information and research resources.
The EEA Human Capital Management and ROI of Engagement YouTube channel features a growing library of 30- to 60-minute panel discussions with leading experts in all areas of engagement and total rewards.
- Enterprise Engagement for CEOs: The Little Blue Book for People-Centric Capitalists. A quick guide for CEOs.
- Enterprise Engagement: The Roadmap 5th Edition implementation guide. A comprehensive textbook for practitioners, academics, and students.
Enterprise Engagement Advisory Services
The Engagement Agency helps:
- Organizations of all types develop strategic Stakeholder Capitalism and Enterprise Engagement processes and human capital management and reporting strategies; conduct human capital gap analyses; design and implement strategic human capital management and reporting plans that address DEI (Diversity, Equity, and Inclusion), and assist with managed outsourcing of engagement products and services.
- Human resources, sales and marketing solution providers profit from the emerging discipline of human capital management and ROI of engagement through training and marketing services.
- Investors make sense of human capital reporting by public companies.
- Buyers and sellers of companies in the engagement space or business owners or buyers who seek to account for human capital in their mergers and acquistions.
For more information: Contact Bruce Bolger at Bolger@TheICEE.org or call 914-591-7600, ext. 230.