Prof. Aseem Prakash and colleague Prof. Nives Dolšak write in Forbes that ESG
This week we celebrate the 55th anniversary of Earth Day. Perhaps the most serious challenge facing the earth is climate change, which reflects the industrial economy’s reliance on fossil fuels. To decarbonize, governments have enacted a range of mandatory policies. Alongside there is a proliferation of voluntary business efforts. Probably the most well-recognized of business initiatives is ESG (Environmental-Social-Governance), a metric to assess firms’ performance holistically, as opposed to relying predominantly on profits.
ESG also reveals a remarkable shift in American politics. Historically, conservatives have criticized government regulations and favored voluntary business self-regulation. In recent years, however, it seems conservatives have revised their opinion about regulations. They are opposing business self-regulatory efforts via ESG. Specifically, they see business leaders succumbing to the pressure of liberal groups and becoming “woke.” For them, ESG means that firms will sacrifice their profit goals to fund liberal priorities.
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