Chasing the “New, New”
The crux of any good advertising strategy is to convince a segment of the market that what they possess right now is quickly becoming yesterday’s news. And if you are caught possessing yesterday's purchase, you will be roundly scorned on social media for not keeping up with the times. We see this in clothes (spring fashion, fall, winter, etc..) leasing a new car or a house makeover to update appliances, furniture, or other such accouterments.
This same type of strategy is making its way into the business world. The proliferation of catchphrases and trendy acronyms has spawned an entire industry devoted to protecting and revitalizing our natural and man-made resources; namely, ESG or environmental, social, governance, sustainability, or regenerative living. What’s worse is that this form of labeling or phraseology puts an individual in one of two camps: the believers or the non-believers. Both camps share a common misconception; neither really know nor fully understand what these acronyms or catchphrases really mean, how it applies to their work, or how to dissect the phrase or acronym and discover what’s real and what’s illusory. The failure to substantiate and produce a tangible result that moves the needle towards a balance between our environment and our economy will, in some cases, hasten a company’s demise.
Why the “New” will never fully replace the “Old”
The term environmental, social, and governance doesn’t represent a radically new form of socially responsible activity. Some form of ESG has been around for several decades, again using different phrases or terminology (Corporate Social Responsibility, Responsible Investing, etc…) to describe a way of doing business or investing in companies that exhibit “good behavior” towards their employees, customers, and community. Much like its predecessors, ESG has yet to make a significant dent in corporate boardrooms or transform business or investment models. By significant, I mean an overhaul of business or investment models that would achieve a true balance between what is good for our planet and society while delivering a reasonable profit margin. This won’t happen any time soon because of a tried-and-true measurement of business success; shareholder returns. If the business does not generate continual growth in shareholder value, it will respond to its investors, be they public or private. This maxim has been around forever and to turn it on its head would require that ESG demonstrate factually and operationally that it can at least match or exceed shareholder value consistently with verifiable outcomes. So far, this has proven to be an elusive exercise.
It’s not about winning a participation trophy
It’s almost as if creating these new acronyms or phrases gives us an ‘out’ for questionable behavior and consistently avoiding the reality that is threatening our way of life. By devising new phrases to describe a way to undo the damage, those who are true believers can safely proclaim that “I did my best, and I deserve credit”. Unfortunately, the terminology is confusing or lacks a uniform measurement analysis. Or both. As such, we lack a generally accepted standard or benchmark that can tell us if we are in fact moving closer to a balanced way of life. Our course of action becomes a “looking out for #1”. Or worse, we’re left to define or report on whatever WE THINK is the appropriate way to measure and report on environmental, social, and governance.
One for all and all for one
To fully appreciate and embrace a new methodology or terminology, it must be accessible to everyone, it must have an approach that is grounded in fact, not illusion and it must stand the test of time. If there is confusion, a lack of substance and validity, or worse, exclusion, then any hope for achieving the goal of restoring ‘balance’ to our way of life disappears. If that happens, the only phrase that will have any meaning will be WSHDM or “we should have done more”.
To give you an example of ESG fragility, consider the phrase “diversity and inclusion”. This is a commonly used reporting measurement of a company’s efforts to make available its resources, programs, employment, and products to all people regardless of race, gender, socioeconomic status, or geography. Yet the fact that a substantial portion of the US population can’t tell you what ESG stands for or describe how it is measured is by its very nature EXCLUSIVE. As unintentional as it may seem, creating a language that is inaccessible by a large segment of society and still expecting that segment to abide by and embrace the philosophy and principles put forth by those crafting the language is, well, counterintuitive. Or CI for short.