Marcus Nakagawa
I’ve been reading many articles about the so-called death of ESG, the decline of ESG fund investments, and how BlackRock—the world’s largest investment firm—has dropped the acronym that represents corporate concern for environmental, social, and governance issues.
For those who haven’t been following, there is an anti-ESG movement, primarily driven by factors such as political polarization in the U.S., where the three-letter term has been labeled as a progressive ideological stance—so-called “woke capitalism.” This perspective argues that generating shareholder value must take precedence over social and environmental concerns, which, after all, are the government’s responsibility through tax collection. Another contributing factor is the lack of regulation and oversight, which has allowed many companies to engage in greenwashing—essentially, misleading claims about sustainability through unverified indicators, unfulfilled commitments, and a lack of technical or scientific evidence. Moreover, numerous ESG funds were created based on poorly developed criteria and limited expertise in the field.
The eagerness for a new investment bubble—like the internet boom of the early 2000s—made this topic, with its numerous indicators, seem simple and attractive. The pursuit of value creation tailored to a new generational group gained traction, as current market research suggests.
In reality, what once seemed like a massive wave of ESG investments has settled into a steady undercurrent within companies. Let me explain: the big wave that had everyone posting about ESG, specializing in it, launching consulting firms, creating ESG departments, and investing in the trend has now become a consistent presence in corporate environments—just like the smaller, continuous waves that always exist at the shore, even without major swells. Perhaps, in the near future, a new term, acronym, or label will emerge—just as we’ve seen this field being referred to as corporate social responsibility, corporate citizenship, corporate sustainability, the triple bottom line, sustainable development, and other concepts that, while academically distinct, all intersect with governance, risk, and social and environmental impact management in day-to-day business operations.
Even BlackRock’s CEO, Larry Fink, now speaks of green investment and transition strategies to combat climate change. And I know that risk indicators related to social, environmental, and governance factors are still being considered in many investment funds and banking institutions.
This undercurrent—this management process that has become embedded in so many companies—is now part of management history. I’ve often written that, before long, business professors will be teaching ESG as a movement that evolved into corporate departments and operational processes. More than that, this “undercurrent” has led to verification indices, reputation metrics, performance evaluations, and executive compensation models tied to ESG.
According to the 4th edition of the study The Profile of CFOs in Brazil by Insper and Assetz, approximately 92% of CFOs report implementing ESG policies, with the environmental pillar being the most highlighted by executives—demonstrating that ESG is making its way into the organization’s financial core. Another strong example is the Expert XP event, which bills itself as “the world’s largest investment festival” and was held in São Paulo this past August. Many of the event’s panels and discussions centered on social, governance, and environmental topics.
Regarding climate change and environmental issues, the strategic consultancy Bain & Company reinforces this ongoing movement through research indicating that by 2030, bank financing in this sector is expected to reach $600 billion. Other sectors, such as industry and government, are projected to invest $430 billion and $350 billion, respectively.
It’s clear that growth is inevitable and that companies are integrating ESG into their daily operations—creating departments, organizing workshops, conducting strategic planning, offering training, hiring specialists, and ensuring that ESG principles are managed and monitored.
In management history, we’ve seen similar processes before—with quality control and ISO certifications in the ’80s and ’90s, with marketing in the ’70s and ’80s, with the internet and IT management since the 2000s, and with other corporate trends that became institutionalized over time.
The death of the ESG tsunami may be real, but the steady undercurrent of ESG indicators is now firmly embedded in corporate and investor decision-making.
* Marcus Nakagawa holds a Ph.D. in Sustainability from USP; he is a professor at ESPM and coordinator of the ESPM Center for Socio-Environmental Development (CEDS); program coordinator for Business Sustainability for Leaders at the State University of New York; founder and president of Abraps (Brazilian Association of Professionals for Sustainable Development); researcher at NOSS EACH/USP; and a speaker on sustainability, entrepreneurship, and lifestyle. He is also the creator of the More Sustainable Days” platform and the author of several books, including Marketing for Disruptive Environments, Management by Competencies, and 101 Days with More Sustainable Actions to Change the World (winner of the 2019 Jabuti Prize).
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