In a world where ESG gets politicised, and politics gets polarised, how can businesses or investors take a stand without taking a side?
The key is to focus on materiality, not (just) morality. And the magic word that does that job, with all the right allusions for all the right people, is “responsible”.
This is the central finding from a comprehensive programme of research published last month by Potential Energy, in partnership with We Mean Business Coalition and Maslansky + Partners.
The Potential Energy team heard from 12,000 consumers in the US and other countries, and 1,000 investors in the US, and ran focus groups with ESG sceptics. Despite the political backdrop, they found common ground for businesses and investors to build on, and common language that works for diverse audiences. The findings are reassuring, practical, and not always intuitive.
At its most basic, responsibility is a powerful idea because people think companies have a responsibility beyond making money. In each of the six countries researched, most people (64-79 percent) agree that “companies have a responsibility beyond serving shareholders to make a positive impact on the world”, and a higher proportion (68-89 percent) agree that “companies have a responsibility to limit their impact on the climate”.
In the US, most people on both sides of the political divide believe that companies “should avoid taking stands on political issues”, and even more agree that “too many people are trying to force their opinion down other people’s throats”. But most don’t think that a company that reduces its carbon pollution, invests in clean energy, or announces that it will continue to use fossil fuels, is taking a political stand by doing so. The politicisation comes from the framing, not from the action itself.
“Responsible business” turns out to be a particularly effective, apolitical framing, embracing both materiality and morality. Asked what they understood by the term, even ESG sceptics gave answers such as “for profits and communities”, and “respecting the environment and making a profit”.
Perhaps most significantly in the US, only 34 percent of people associate the term “responsible business” with a progressive political agenda, compared with 52 percent who associate “ESG” with a progressive political agenda.
At the other end of the spectrum, 26 percent associate “responsible business” with a conservative agenda, compared with 14 percent for “ESG”. In fact each group sees the term “responsible business” as their own: Democrats tend to associate it with a progressive agenda, Republicans with a conservative agenda, and Independents with a moderate agenda.
This is a communicator’s dream. And it is not a case of image over substance, using the same words but twisting the meaning. In each of the three political groups, an overwhelming majority agree that “responsible businesses are more focused on reducing their impact on the environment”, and that this responsibility makes them more likely to succeed financially.
The power of “responsibility” as an idea comes partly from the way the word embraces the whole range of motivations, from conscience to short and long-term self-interest, or from morality to materiality.
It also comes from how the word flexes in a different way. “Responsibility” can signal either a sense of obligation (I am responsible for something because of the position I have been put in, whether I like it or not) or a sense of agency (I am a responsible person, so I choose to make a responsible choice).
The first appeals particularly to climate supporters on the political left, who see the issue as imperative and suited to imposed solutions, often by government. The second appeals more to the (often neglected) climate supporters on the political right, who share the same planetary ambitions but value the opportunity for different people and organisations to choose to engage with the issue in different ways.
The first group would like us all to accept responsibility; the second group wants to take responsibility.
This is why, as Potential Energy puts it: “Anyone who looks at it can see themselves in it.” We won’t all agree on every policy, strategy, or investment. But we can, surprisingly broadly, support the idea of responsible business and responsible investing.
Simon Glynn is founder of Zero Ideas, challenging leadership thinking on climate action.
