Salesforce co-CEO Marc Benioff has been preaching for years about the importance of corporate social responsibility, the idea that companies need to worry about not only making money for investors but also contributing positively to the wider community in which they operate.
He could be onto something. Increasingly, consumers and some investors want to do business with companies that at least try to do the right thing.
In fact, a term has developed in recent years around a set of corporate initiatives to run business with an eye toward broader social responsibility. ESG, or environmental, social and governance, is an umbrella term that developed around this set of goals, which can include community outreach, DEI efforts, thoughtful leadership, environmentally friendly policies like a net-zero emissions goal, and running your business in an ethical and responsible way, among other things.
While it’s typically applied as a filter for investors, businesses have also adopted the term as a kind of organizational moral compass and a set of principles to try and live up to as part of their values system.
As this notion begins to take shape, CNBC reported that there is already a backlash against the concept among some Fortune 500 executives who are upset about reporting requirements.
“Data is important, but it is not everything. How do you measure the soul of a company?”
Robert Former, CISO/VP of security at Acquia
Last year, Frank Slootman, CEO at Snowflake, ruffled some feathers when he told Bloomberg TV, “We’re actually highly sympathetic to diversity but we just don’t want that to override merit. If I start doing that, I start compromising the company’s mission literally.” He went on to say that other CEOs agree but won’t say so publicly. While he later walked back those comments a bit, the CNBC report suggests that ESG is under attack more broadly from both executives and from some Republican politicians.
What’s more, a Harris Poll of 1,491 executives across 16 countries conducted on behalf of Google found that executives may not always be truthful about ESG efforts. In fact, 58% of respondents believed that “green hypocrisy exists and their organization has overstated their sustainability efforts,” according to a report from Google.
But these executives could be out of touch with consumer and investment sentiment. A Harvard Business School blog post by Tim Stobierski lists 15 findings from various surveys that might turn the heads of business leaders who question the value of ESG efforts.
Consider that he writes that “70% of Americans believe it’s either ‘somewhat’ or ‘very important’ for companies to make the world a better place,” and 41% “of millennial investors put a significant amount of effort into understanding a company’s CSR (corporate social responsibility) practices, compared to just 27% of Gen X and 16% of baby boomers.”
TechCrunch spoke to leaders from three companies — Plume, Beamery and Acquia — to get their views on ESG and why they are passionate about working at a place that cares about the world as much as making money for shareholders. (Plume and Beamery are late-stage startups, while Acquia was late stage when it was acquired by Vista Equity Partners in 2019.)
Source @TechCrunch
