ESG – More Like ‘Everyone Stop Gaslighting’

Gaslighting is a form of manipulation where a person intentionally misleads another for their own gain by creating a false narrative or by questioning their judgements and reality.??

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In layman’s terms, it’s lying and accusing anyone who points it out as crazy. Or throwing so much nonsense someone’s way for the sole purpose of using their confusion to your own advantage.?

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So, why am I bringing it up here???

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Because, for many reasons, I’d say ESG, or environmental, social, or governance, investing has become nothing more than firms gaslighting investors, customers, and stakeholders.??

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Especially in the food industry.??

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While many refer to this practice as greenwashing , I argue that it’s much more nefarious than that. The entire system on which ESG sits is one of smoke and mirrors, and time is too precious for it to continue unchecked.???

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What we really need to move our society closer to achieving goals in sustainability is to take a cold hard look at what ESG has become and to understand what players within the food industry, including restaurants, convenience stores and grocery stores, can do to create actual change. No gaslighting needed.??

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The Problem with ESG?

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When ESG was first pitched to investors it was sold on the promise of ushering in a new era of business where profit would be tied to sustainability and money would be used to bring us closer to a carbon-less economy.???

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But the evidence has mounted on how ESG is nothing more than a fa?ade.??

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The ratings investors rely on to make ESG investments have no objective measurement of a company’s impact on the environment or society at large. In fact, they measure the opposite – how changes in climate and the world will impact a company and its bottom line. Something even the CEO of MSCI , one of the providers of ESG ratings, admitted few investors are aware of.??

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Further, while most ESG funds are regulated, ESG ratings are not . Ratings are created by a select few providers, each with their own framework and data collection methodologies, often leading to little correlation among the numbers. For example, the rating a company gets from MSCI has been shown to be significantly different from that it received from ISS or S&P, despite the fact that they’re all ‘supposed’ to be measuring the same outcome.??

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Lastly, most companies focus on upgrading their ratings by doing the bare minimum. Nearly half of companies who increased their ESG ratings , 42% to be exact, did so by focusing on corporate governance, or the G, as opposed to E or S in ESG. And within governance, ‘points’ you could say are awarded for the most rudimentary business practices, like conducting employee surveys to reduce turnover or having a company policy , as opposed to activities that hold a true impact.??

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E-S-Gaslighting in the Food Industry?

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As a result, ESG promises, especially those made within the food industry, have been hollow.??

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In 2007, the Coca-Cola Company made a pledge to replace “every drop of water we use in our beverage and their production” by 2020 after coming under fire for siphoning this resource away from farmers in water-stressed areas around the world. Flash forward to today, we now know this commitment, while valiant in words, was severely limited in action. It targeted only water used in its manufacturing process, a mere 10% of the company’s total usage, and ignored water procured along its agricultural supply chain.?

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A few years back, Keurig Green Mountain told consumers its K-Cups were recyclable, so long as the metal cap was removed. A $10 million settlement later, we come to find out that most materials recycling facilities could not process their cups and they ended up in a landfill.??

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In its efforts to reduce waste sent to landfills, Starbucks unveiled a straw-less lid that its Chief Sustainability Officer claimed was recyclable and would allow customers to take “another step in our journey to reduce our environmental footprint.” In typical, gaslighting fashion, scientists have since found that the new lid actually contained more plastic than the traditional lid and straw combination.??

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By the United Nations ’ estimates, the growing, processing, packaging and distribution of food accounts for nearly one-third of all greenhouse-gas emissions.??

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And following this year’s most recent COP27, it’s become clear that we are at a critical point now where sustainability and achieving net zero is a necessity. Scientists are calling the 2020’s the “critical decade for climate change”, as the window of opportunity is narrowing to keeping temperatures below 1.5°C.??

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For these reasons, we simply can’t afford to have companies within and adjacent to the food industry, continuing to gaslight stakeholders.??

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What Companies Can Do??

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True change needs to happen, and in my opinion that comes down to executives and firms making three critical changes.??

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• Proving the Impact. The first is taking the initiative to prove their impact, no matter if it’s environmental, social, or corporate related. Take the case of my own company, TAGeX. Last year, we partnered with MBA sustainability student researcher, Alex Gerszten , at the MIT Sloan School of Management to estimate the environmental impact of our work.??

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Even though the nature of our firm keeps restaurant equipment out of landfills and reduces waste in the industry, we knew saying that wouldn’t be enough and we wanted to take it a step further to help prove it. And it was only through the report we were able to discover TAGeX facilitated the avoidance of 9,401,020 kilograms of carbon dioxide each year, or the equivalent of 5,500 round trip flights between New York City and Los Angeles.???

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• Increasing Transparency & Disclosure. Along the same lines, executives need to take it upon themselves to be transparent around their ESG efforts and disclose these and other activities to key stakeholders.??

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It’s a sad trend when you have companies like Kroger, Ahold Delhaize, and Sprouts Farmers Market , pouring hundreds of millions of dollars into sustainability initiatives, yet unwilling to even field questions about the results of these programs or what they even are. With so much distrust circling around ESG, especially now, consumers expect answers.??

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• Adopting Uniform Science Based Metrics. Lastly, true change can only happen when objective uniform standards are put into place, which is currently lacking in ESG investing. The best approach any company can take is adopting prescribed science-based targets, or SBTs.??

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This is what five out of the six top food brands managing over 100,000 restaurants globally have had to do in the face of growing pressure from consumers. Recognizing that simply claiming ESG wouldn’t be enough, McDonald’s, Chipotle, Domino’s, Wendy’s, KFC, Pizza Hut, and Taco Bell have all set or at least plan to set aggressive SBTs to keep global warming below 2°C, those recognized internationally.???

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Even if you’re not a major brand, there are still feasible options available to incorporate uniform standards around sustainability initiatives. For example, the non-profit organization Ratio Institute recognized a need for standards specific to grocers , and released its Food Retail Environmental, Social and Governance (ESG) Reporting Standard, which has become a champion the Independent Grocers Alliance (IGA) and FMI-The Food Industry Association (FMI).??

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What’s great about these standards is how they’re tied to tangible change and create metrics around issues that matter like greenhouse gas emissions, food safety, occupational health and safety, labor, human rights, diversity, equity and inclusion (DEI), and sustainable supply chain and sourcing.??

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Taking the Next Step??

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The gaslighting that ESG has become needs to end. While the first step, acknowledging there is a problem, is important, it’s the next that will be most critical. Moving forward, food companies and their executives must commit to making an impact, take steps to prove that impact, share that impact no matter how big or small with stakeholders, and ensure its tangible using metrics based in science.??

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It certainly won’t be easy but becomes a necessity as we continue to face mounting sustainability and societal challenges.??

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If you’d like a copy of the MIT study conducted for TAGeX feel free to message me on LinkedIn or email me at: [email protected] .??