Nives Dolsak is Stan and Alta Barer Professor in Sustainability Science and Director of the School of Marine & Environmental Affairs. Aseem Prakash is the Walker Family Professor and the Director of the Center for Environmental Politics. Both are at the University of Washington, Seattle.
anniversary of Earth Day . Perhaps the most serious challenge facing the earth is climate change , which reflects the industrial economy’s reliance on fossil fuels. To decarbonize, governments have enacted a range of mandatory policies. Alongside there is a proliferation of voluntary business efforts. Probably the most well-recognized of business initiatives is ESG , a metric to assess firms’ performance holistically, as opposed to relying predominantly on profits.
ESG also reveals a remarkable shift in American politics. Historically, conservatives have criticized government regulations and favored voluntary business self-regulation. In recent years, however, it seems conservatives have revised their opinion about regulations. They are opposing business self-regulatory efforts via ESG. Specifically, they see business leaders succumbing to the pressure of liberal groups and becoming “woke.
Firms have a fiduciary duty to maximize shareholders’ wealth. Using this argument, Attorney Generals of several U.S. states have sued financial companies that employ ESG. The U.S. House of Representativeshas subpoenaed BlackRock and State Street Global Advisors to investigate whether they are colluding to promote ESG. In this politically charged environment, financial investors are backtracking onFor fossil fuel supporters, ESG is a de facto climate standard.
The climate crisis is real and capitalism is in danger due to public backlash to rising income inequalities and declining living standards. The fundamental questions about the social purpose of the firm are even more important today than ever before. In the 1970s, Miltonwrote that the “Social Responsibility of Business is to increase its profits.” For Friedman, corporate social responsibility is charity.
ESG Larry Fink Ukraine Social Responsibility Of Business Stakeholder Capitalism Earth Day Climate Change
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