The Wall Street Journal reports that American corporations are trying to boost profits and appease investors by reversing a multi-year trend of employing more people for positions connected to ESG problems.
December saw a net loss of 3,071 ESG posts at U.S. corporations, with just 2,897 new roles added. This trend has persisted for half of the previous year, according to the WSJ. Investors are shifting their money away from companies with strong ESG standards and towards organizations with better return potential, which is driving this change.
Joe Dubbin, managing director of executive search company Cripps Leadership Advisors, told the WSJ that “2023 saw a dramatic cooling in discourse about ESG and, in certain areas, quite a pronounced attack on what ESG was about.” “It has definitely made its way into the hiring criteria that have been assigned to us.”
According to the WSJ, in 2022, companies employed over 66,000 people with an interest in environmental, social, and governance (ESG) issues, with over 55,000 left. In 2023, the opposite happened: companies hired 40,884 people with such an interest, while 39,452 left. With 49,383 employees departing, hiring reached a peak of almost 68,000 in 2021.
The Wall Street Journal said that in 2023, Google, Facebook’s parent company Meta, and Amazon were the top three companies in terms of the percentage of ESG personnel cut. The largest outflows were in the consulting, financial services, and technology industries.
There were more ESG fund closures than openings in the third quarter of 2023, due to the roughly $2.7 billion in losses experienced by these funds. For the fourth consecutive quarter, investors withdrew money from ESG funds.
Rep. Jim Jordan (R-OH) sent subpoenas to Vanguard, BlackRock, Arjuna Capital, and State Street Global Advisors in December, requesting information related to an antitrust probe concerning ESG collusion. This puts top asset managers under legal pressure from congressional monitoring. Claims by legislative officials in December 2022 that asset managers were organizing a “cartel” to reduce corporate greenhouse gas emissions sparked the probe.
In May 2023, Republican Florida Gov. Ron DeSantis signed a bill that discourages financial companies from discriminating against consumers based on their political, religious, or social viewpoint. The bill forbids state and municipal governments from taking ESG issues into account when issuing bonds. Additionally, in March 2023, DeSantis spearheaded a coalition of 18 states opposed to ESG, urging other governments to outlaw specific tactics similar to Florida’s.
“You’ll have to figure out what language you’ll use to stay in compliance while also continuing to do business with your biggest customers who are asking for sustainability, carbon, or ESG data,” Mike Wallace, chief decarbonization officer at carbon accounting firm Persefoni, told the WSJ.
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