An Uncertainty about ESG

No, not that one.

The Environmental, Social and corporate Governance initiative is a trend or collection of trends that has been building in Western economies for around two decades. There are several questions about it. The obvious one is whether or not it would be divisive in workplaces due to political disagreement over the choice to follow government or local activity policies or not. I'm not interested in that one.

I'm interested in the sources of ESG's specific recommendations.

There are several points at which the movement appears to have begun. First, Wikipedia mentions a UN advocacy report of 2004. Second, a tendency of mutual funds and banks to group "responsible investments" together started at about the same time. Third, legal actions as to the composition of corporate boards have been filed at various times for around twenty years in some of the developed nations. And fourth, there have been measurement projects regarding contributions to greenhouse gases. And so on. My question regards the DIY (do it yourself) appearance of the combination of all these sources.

Those responsible for corporate identity are naturally attracted to the opportunity to become associated with popular trends. I simply wonder how controllable such associations in fact are. How could the sources of ESG initiative change? How would one even list these new stakeholders? Could they even BE known in the short run? Are the initiatives even now something that is media-driven? And how is the company exposed to not only new problems, but new uncertainties?

I predict the rise of two possible developments... OK, three:

1. Some companies will retreat from the uncertainty of ESG by adopting the strategy of "We don't get into politics".
2. Some companies will adopt only ESG initiatives that directly address their corporate identity and product/services rationale, shrinking from involvement in more general concerns (and possibly reducing the income of charities and other nonprofits that rely on donations).
3. Companies will consider the above alternatives not only due to verification questions as to the nature of popular ESG trends, but due to the tendency of advocacy groups to change over time, and in directions very hard to predict. There's also the nature of the next advocacy issue - and the next. There's no way to tell what the next popular bandwagon will be.
4. Surprise! Unknowns abound. Apparently non-controversial causes can become controversial later. Should the company contribute to the American Red Cross? Or overseas sister organizations? There was a moderate outcry several years ago about how much the head of the ARC got paid relative to other charity groups. That complicated the positions of those companies that contributed for motives as simple as tornado or hurricane relief.

I don't know how all this will wash out - but that's my point. I don't know how one COULD know. It could be that involvement in some specific ESG concern would be completely necessary to corporate identity. But I think many ESG concerns are not relevant to corporate identity and are optional. This option may be destabilizing to productivity and competitiveness. Then again, involvement in some trend could CONTRIBUTE to productivity and competitiveness, depending upon the product, the industry, the organization. Also, there's the further complication that an ESG concern could be raised tactically against a company by one of its competitors, openly or through surrogates.

What's certain is that business now has a new ongoing debate with which to deal. There existed quite a few already; now here's one more.

EDIT: To approach the issue from a positive direction, though, it would seem possible to do popular cause support at minimal risk to an organization by sticking close to one or more of the following conditions:

1) Is the issue something that much of the group can get behind, from board room to mail room, rather than just a few interested parties?
2) Is the issue something that has a crucial connection with the company's core activity?
3) Is the issue a matter geographically or personally connected with the immediate community in which the company is located? After all, support could have "political" benefits and all politics is local.