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Shattering of business certainties makes ESG a priority

Updated: Apr 7, 2023

This letter was first published in the Financial Times

Robert Armstrong writes compellingly about the challenges of environmental, social and governance investing and the choices people have to make around whether, for instance, to manage money on behalf of totalitarian regimes (“A better argument for ESG, maybe”, Opinion, January 27). He is also right that “a lot of the ESG investing industry is grounded in bullshit” with endless false claims, driven by being a “massive fee trough” for all concerned.


Yet he evaluates arguments for ESG on a largely utilitarian and financialised basis, focusing on the attractiveness to employees and the cost of capital for corporations. This risks perpetuating the muddle that has degraded ESG into a tick box exercise. Companies do not stand apart from the societies in which they operate. They are embedded in those societies and have an important role to play in how those societies function. ESG is just one manifestation of the fact that the socio-cultural-political climate has changed dramatically over the past couple of decades. The nature and tone of political debate has become more heated. Previous certainties have gone, such as our views on globalisation, the primacy of laissez faire neoliberal ideology, the supposed effectiveness of trickle-down economics, our tolerance of the externalities generated by business activity, the acceptance of the idea that the role of business is exclusively to maximise shareholder value, the perils of financialisation and many other political issues too numerous to list.


The fundamental question for business is therefore a simple one: how do I evolve and adapt my business practices to succeed in this new environment amid the shattering of previously held “truths”? ESG investing should be about evaluating how well companies are adapting to this new environment and therefore how likely they are to thrive going forward rather than mechanically and thoughtlessly being led by the nose by rankings and other evaluations of dubious quality and “grounded in bullshit”.


Joe Zammit-Lucia Radix Centre for Business, Politics and Society, Amsterdam, The Netherlands

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