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No, ESG and DEI don’t just have a branding problem

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No, ESG and DEI don’t just have a branding problem

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The verdict is in: ESG is now branded a “dirty word”–and even those who are in favor of DEI policies are now talking about the need for a rebrand.

It’s true that capturing so many different concepts under an alphabet soup of acronyms is convenient and lazy. For years, it has allowed both sides to argue about everything and nothing at all.

However, we should be equally worried about the growing “rebrand” movement. By focusing on terminology, those of us who support corporate diversity efforts are falling into a classic progressive trap: “We haven’t explained the issue well enough. If only they understood, we’d win.” This is the next iteration of the intellectual condescension that has been a major contributor to the rise of populism.

Those of us who want to see corporate diversity efforts grow need to stop dismissing the other side. As Joelle Emerson, the founder and CEO of Paradigm, wrote, “While extreme views and intentional efforts to undermine DEI of course exist, there are many more people who are interested in learning… making room for dialogue, leading with curiosity, and recognizing that values-aligned people may sometimes have differences of opinion are important steps for engaging a wider audience.”

We won’t win this debate by tweaking our words. We’ll prevail by defining the business imperative of initiatives that promote opportunity, targeting investments more precisely, and measuring results with the same rigor we apply to core financial metrics.

When I worked at Bloomberg a decade ago, the company was heavily invested in leveraging data to improve corporate sustainability efforts. With virtually no standards of measurement, some companies were making real progress but struggled to prove it, while others were able to hide behind programs that had little impact. Our view was that measurement shines sunlight on the good as well as the bad, allowing the market to objectively invest in solutions with proven results and reject the shiny projects that fail to move the needle.

Measurement in sustainability has improved dramatically in recent years, and companies such as Unilever and IKEA have been able to double down on high-ROI investments that are good for business and the planet. Soon-to-be-released SEC climate disclosure rules are likely to make measuring corporate environmental impact even easier.

The same can’t yet be said for programs that promote opportunity, which are admittedly tricky to measure. In the aftermath of George Floyd’s murder, Fortune 1000 companies pledged $340 billion to social and economic justice. Several major media outlets and watchdog groups have attempted to track these commitments and have universally found it impossible to measure the total amount of dollars spent, much less their impact. Without reliable measurement, we lack a solid foundation for fact-based, rational conversations about what has worked and what hasn’t. As the old saying goes, you can have your own opinions, but not your own facts.

C-suite leaders can and should stand by opportunity programs because they are the right thing to do, but the future of these initiatives lies in whether the business case can be proven. The CEOs I speak with say that diversity strengthens the resilience and performance of their companies. They can see and feel the benefit of diverse perspectives and opinions every day. That intuitive approach is good but not enough. Companies, especially large ones, need to do more to measure the impact of their programs on recruitment and talent retention, sales, management, and governance. When we can measure the precise financial return on ESG and DEI efforts, they become indisputable. We need to traffic in facts, not just values.

David Meadvin is the CEO of One Strategy Group, a corporate strategy firm that advises C-suite leaders and growth-focused companies. Paradigm is a partner of Onestrat.

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