A few days ago, we discussed how polarization is affecting sustainability on “La butacaca de la ESG”, the podcast I co-hosted with Alberto Andreu, the President of ASG.
Meanwhile, in some parts of the world, we are making progress with the help of regulations. The green taxonomy establishes the criteria that financial institutions must use to determine whether an investment is sustainable or not. It is part of the European Commission’s Action Plan for Financing Sustainable Growth, an ambitious initiative to direct capital flows toward sustainable investments. To achieve this goal, companies must report on the sustainability of their products and services. This is how Europe, which has missed out on some technological advancements, plans to influence economic development through what is known as the “Brussels Effect,” according to Anu Bradford of Columbia Law School. This plan is aligned, eligible, and all good.
It appears that various financiers, including money-makers, funds, and investors, as well as companies of all types and regulators such as politicians, have agreed to move towards a fairer, more balanced, and sustainable model. BlackRock’s CEO, Larry Fink, is a prime example of this consensus, often compared to Greta Thunberg in the investment funds world. However, there are some “buts” to consider. Executive Chairman of Strive Asset Management, Vivek Ramaswamy, has urged companies like Disney, Chevron, and Apple to focus on profitability rather than ESG initiatives. Vivek passionately explains how large corporations are utilizing the pensions and retirements of Americans to finance the transition to green energy and other murky objectives. It seems like a fight is brewing between the two sides.
The SDGs mark a historic milestone as humanity finally agrees on how to transform the world. They represent a series of goals that were approved in 2015 by all member states of the United Nations with the aim of ending poverty, protecting the planet, and ensuring that all people live in peace and prosperity by 2030 – the year when environmental, economic, and social sustainability must be balanced. It is rare to find a company that does not have the 17 SDGs displayed on its door. However, the interpretation of sustainable development varies among individuals. Some believe that sustainable development means development without growth, while others believe that it is possible to continue growing sustainably.
These arguments have inevitably spilled over into the political arena. Forética’s annual report, “ESG Trends 2023: Keys to the Corporate Sustainability Agenda,” draws attention to the “exuberance” with which some parts of the business sector have highlighted their commitment to sustainability in a record time frame. This has generated suspicions and accusations of greenwashing, leading to strong social polarization, as noted in the report.
Amidst all the commotion, what is needed is temperance and constructive response. Oxford University professor and avowed Democrat Robert Eccles and K&L Gates LLP’s Daniel F. C. Crowley, an avowed Republican, have jointly published an entry in the Harvard Law School Forum titled “Turning Down the Heat on the ESG Debate: Separating Material Risk Disclosures from Salient Political Issues.” In the article, they propose leaving climate risks out of the political/ideological debate.