Anti-woke activists are coming for ESG and DEI. Here’s what dedicated leaders can do

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Anti-woke activists are coming for ESG and DEI. Here’s what dedicated leaders can do

By Jesse Meschuk

Not long ago, environmental and social governance (ESG) positions were in extremely high demand. At the height of the pandemic in 2021, ESG/sustainable funds saw inflows of nearly $600 billion. An explosive war for ESG talent followed —not just in asset management but across nearly all sectors of the economy. Some ESG leadership jobs saw pay levels rise nearly 200% in response, and many businesses reported that it took nearly a year to fill ESG jobs.?

Now, growing backlash against ESG initiatives from shareholders and activist groups has put a chill on the ESG job market. Most asset managers have pulled their postings, or have filled their roles and aren’t hiring further, while other industries seem to be waiting before investing further. Recent BLS data shows environmental consulting jobs peaking in October before pulling back in November.

According to a recent Public Affairs Council survey, companies and corporate affairs leaders are now looking for ways to carry out their environmental, social and governance priorities without getting trapped in any political crosshairs as the 2024 election approaches. So long as ESG initiatives remain a political football, chasing those jobs might be trickier than tackling a slippery, speedy quarterback.?

Similarly, jobs related to diversity, equity, and inclusion (DEI) skyrocketed by 55% in mid-2020 through 2021 before cooling more recently. Budget pressures amid a turbulent economy, and legal actions including the Supreme Court’s decision in June to eliminate affirmative action in college admissions, have impacted the field. DEI jobs have receded from their 2021 peak, and last year’s tech layoffs hit the field particularly hard.?

Is DEI and ESG work still a priority for corporate America? How can the many corporations that want to demonstrate a genuine commitment to social, environmental, and diversity causes, navigate that in today’s political climate? How do they balance these commitments while still showing they make responsible payroll and spending decisions??

ACTIVIST INVESTORS VS. ESG

Fortune reported in October that ESG-related business initiatives were widely proposed in 2023, but met with declining support among shareholders: 23% compared to 31% in 2022. Proposals specifically around environmental issues were met with steeper declines: 20% in 2023 compared to 34% in 2022.?

Even though pressure from so-called “activist investors” is increasing, the cost (as opposed to the benefit) of any ESG proposal is still the primary concern among shareholders. If your organization’s leadership, shareholders, and employees are in alignment about the importance of ESG, then continue to pursue such initiatives but do so wisely. Show benefits along with the costs. Share ideas in collaboration with teammates. Engage with all your investors to get their perspectives. An ESG expert can help navigate the balance of present-day versus future costs and benefits.?

Social concerns should also be considered carefully. Nawar Alsaadi, a self-described “sustainable investing evangelist,” has proposed that mainstream investing and sustainable investing will become indistinguishable someday.

For now, however, some businesses face political pushback when their own ESG initiatives run counter to local and state policies. One study suggests age is more of a dividing factor than political affiliation when it comes to supporting ESG initiatives. If your business is in the market for younger employees, it makes sense to highlight and follow through on your sustainability goals as part of your employee recruiting efforts.?

The World Economic Forum predicts big growth for climate change and environmental management technologies, which suggests jobs will follow. Keep this in mind when training employees on skills that will be relevant to your business three years from now.

Across-the-board changes in industry standards away from fossil fuels, and toward more sustainable business practices, are hardly fads. But the road to incorporating company-wide ESG initiatives will be uneven, which in turn will affect job-seekers as they navigate a fluctuating marketplace for their services.??

DEI?VS. SUPREME COURT RULINGS

In 2023 the Supreme Court struck a blow to race-based admissions practices at Harvard and the University of North Carolina. Will that have a knock-down effect on companies trying to create a more diverse workforce???

Perhaps. Some DEI job listings have already been pulled down without being filled. According to one survey, one in three DEI professionals lost their jobs between December 2021 and 2022, while non-DEI workers experienced a relatively lower attrition rate of 21% during the same period. As a hiring trend, DEI experts have become a lower priority over time.??

Diversity brings about innovation but needs to be structured and logical in light of your overall business strategy. Properly structured DEI efforts invite benefits like more creativity, reaching new target segments, the ability to bring new products to market, etc. If you think your hiring practices require internal or external oversight to be more inclusive of candidates from diverse backgrounds, for example, hiring a DEI consultant before a hiring spree might make sense.?

Engage with your workforce to understand what initiatives are most important. Look at your data. Comprehensively track diversity metrics relative to promotions, and establish clear criteria and hard metrics for employee evaluations. This can be a key differentiator for company culture and drive retention. Compared to one-off training sessions, sustainable initiatives, policy changes, equitable processes, and continuous learning and development programs are more effective in helping firms achieve their DEI goals.?

Remember that this is a continuous journey. Long-term DEI initiatives can’t be implemented overnight, and not everything has to be done at once. Set realistic goals in light of your business realities. If you aren’t hiring much, then work on how to improve overall engagement with different groups within the organization. Where you do have limited roles, you can focus on inclusive hiring practices.????

DEI and ESG might represent trends that fall in and out of favor with employers, but the companies who have committed and sustained investments in these areas are having success. While job openings might be more limited now than a year ago, that is not mutually exclusive to a corporate commitment to DEI and ESG initiatives.?

Any business can make an extra effort to find diverse candidates. In 2020, for example, General Motors announced the formation of an “inclusion advisory board” consisting of the automakers’ senior leadership team. By making the pronouncement public, shareholders and customers have a better chance of holding GM accountable to its mission of inclusion, compared to a quietly instituted DEI department governed from outside the C-suite.?

ESG initiatives can become part of your existing workflows too, an extension of how everyone on your payroll does their job. Anyone in a position of departmental leadership can ask where such initiatives make sense for your business, where they can save money, and where the long-term benefits outweigh any short-term investments.?

The disappearance of DEI and ESG jobs doesn’t have to mean that DEI and ESG initiatives disappear from your business’ priorities, but it takes a broad commitment from within.?

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