ESG Can Lead to Higher Profitability

If you’re a hammer, everything looks like a nail. And if your firm is among the rising tide of companies that embrace “environmental, social, and governance” principles, ESG may look like the only responsible framework for doing business in our enlightened, 21st-century global economy. But not everyone is a hammer. And many who would like to see all companies adopt ESG standards could be more effective at winning over ESG opponents—by persuading them, instead of hammering them with rhetoric that seems to confirm their worst fears.

I realized this at a real estate conference this year where everyone was talking positively about ESG. It dawned on me that the room held entirely different demographics than the boardrooms I had served in that month. Many board-level decision makers broke barriers and set records when building up their own companies—years before ESG’s emphasis on stakeholder (versus shareholder) returns became mainstream. Naturally, such leaders may hesitate before exchanging their proven, profit-focused framework for one that emphasizes other causes. But because ESG is such a politically charged subject, discourse is often (shall we say) dead as a doornail.