Why Has “ESG” Become “Woke?” - Environmentalism can be Nonpartisan

The decision of the Texas Schools investment fund to withdraw more than $8 billion worth of investments from the multinational investment company Blackrock can be traced back to a 2022 state “anti-woke” law against “ESG Investment.” Until a few years ago, this acronym was an esoteric label. It has now become a rallying cry for many Republicans who have conflated “Environment, Social and Governance” with a Liberal “Awakening” - hence “Woke” movement. In particular, the marginalization of fossil fuel companies by investment houses like Blackrock has been at the heart of this strident move against “ESG.”

During the time when the late Jack Welch was the CEO of General Electric more than 25 years ago, I worked as a Technical Leadership Program associate at the company. In those days the acronyms of choice in this domain were “Environmental, Health and Safety” (EHS) or Safety Health and Environment (SHE). Much of the EHS department’s work was confined to compliance with specific laws on environmental and occupational health performance. This was largely handled through audits and monitoring of complaints and the occasional lawsuits against the company. While there was occasional rumbling of discontent among the profit-watchers about the expense of compliance, in general this was not a politically charged matter.

There was a time when Republicans prided themselves on having established the Environmental Protection Agency under Richard Nixon. Even during the divisive years of “Republican Revolution” in the 1990s, the environment used to be a unifying issue in American politics. The Speaker of the House during this time, Newt Gingrich, an otherwise polarizing Republican politician, wrote a book titled Contract with the Earth (to mirror his Contract with America), with a foreword by leading Harvard ecologist and doyen of environmental thought E.O. Wilson!

So what has happened to cause this sudden revulsion to environmentalism among Republicans? The simple answer is that climate change has become the touchstone of twenty-first century environmentalism in such a consequential way that most other environmental issues have been eclipsed by its prominence. This is a pity because important efforts like “ESG” which expanded the purview of environmental health and safety to also include community development are now being dismissed. Politicians with vested interests in the fossil fuel industry have successfully stigmatized “ESG” because it includes an emphasis on reducing consumption of fossil fuels. No doubt we need fossil fuels for the foreseeable future but some tough love to incentivize the industry diversify should be seen as an opportunity rather than a threat, as exemplified by recent statements from British Petroleum (BP).

The social development attributes of ESG actually benefit many Republican constituencies, particularly in Appalachia — which have not seen much poverty alleviation despite a major reliance on the coal industry for employment. Communities that initially benefited from hydraulic fracturing for natural gas (Fracking), have seen a steady deterioration of quality of life in the absence of ESG pressure on companies. Labeling ESG as “Woke” to conflate it with social activism on more personal “belief” issues is a major disservice to predominantly Republican constituents in these areas. At the same time, environmentalists need to decouple climate activism from broader ESG goals. While ideally, we should have an earth systems approach to considering all such issues together, decoupling is needed for pragmatic reasons to ensure environmentally responsible investing on other matters.

Source: Forbes