How Business Can Win the Fight for DEI and ESG
The anti-DEI push isn’t a backlash, it’s a coordinated movement.
My last column on that topic has received tremendous feedback. I’ve heard from people from all sectors and industries about how my article helped them see the issues differently and reinvigorated their commitment to racial equity.
In fact, just in the few weeks since my column came out, we have new data that shows how much support DEI and ESG efforts have among the general public. Public Private Strategies Institute, in partnership with pollster Morning Consult, conducted a survey of over 1,000 people and found deep support for DEI and ESG initiatives within business. Over half of adults support business involvement in ESG initiatives and about the same number similarly support involvement in DEI initiatives. Nearly two-in-three adults agree that ESG investments should be made easier, a response that cuts across partisan identities. One-in-five investors say that a company’s ESG initiatives are a top priority for them. More than half of investors consider them an “important” priority.
Despite the widespread support for ESG and DEI, the coordinated campaign against these strategies continues. Almost 400 anti-ESG/DEI bills have been introduced across the country since 2021, with around 95% of these focused on preventing ESG strategies like divestment from fossil fuels.
Luckily, only about 10% of these bills have passed, and almost half of them have been defeated outright. But those bills that did go into law are some of the most anti-DEI and anti-ESG legislation out there, such as bills in Indiana and Florida that basically ban the practice of ESG-driven investing.
The good news is, now that we know that the push against DEI and ESG in business comes not from broad-based grassroots support, but from a coordinated and well resourced minority, we can adjust our efforts to stop further restriction on DEI and ESG accordingly.
The politicians making the decisions about these laws are not focusing on business priorities. They are making choices based on scare tactics and talking points from a few highly motivated and well-resourced individuals, not what businesses actually need and want. Unfortunately, these laws are creating an environment that is antithetical to the very nature of business. They are tying companies’ hands behind our back, leaving us without the tools we need to remain competitive.
Consider Jamie Dimon’s stance on the anti-ESG legislation coming out of Texas: He said anti-ESG laws are anti-business. This pressure is driven by a political agenda, not based on business needs or market pressures, and will have broad implications from Wall Street to Main Street.
Fortunately, companies know how to deal with these kinds of potential disruptions to how we do business. Businesses constantly assess potential threats to their market share or way of working, and adjust accordingly. They do landscape research on potential competitors and tailor their product or service offerings. They consider the impact of regulations and lobby based on what they feel is in their best interest — this is why car companies actually support regulation around gas mileage, because it helps set standards for their competitors, taking out one aspect of competition within the market.
Yet very few companies have taken on these anti-DEI/ESG policy developments with the robust strength that they do with other strategies, despite overwhelming data that these approaches are in their best long term interest, including that two-thirds of customers want businesses to take a stand on issues they care about; 70% of job seekers want a job that creates impact; and consumers want businesses to be more engaged on social issues, not less.
I suspect that they are hesitant to advocate for pro-social impact policies because the issue is now seen as “political” or “partisan.” They are afraid to come out against something that has become such a hot-button issue. Yet not speaking up risks our global competitiveness. The rest of the world is actually advancing pro-ESG and DEI policies and regulations in dramatic fashion.
We need to address these anti-business policies just like we would for anything else. More businesses and corporate leaders need to speak up, like Dimon, in a way that defends DEI and ESG with pro-capitalist arguments. There should be a coordinated campaign pushing back against the one that’s been assembling for the past three years. And for businesses that are reluctant to individually jump in the fray, another approach is to organize through industry associations. The tool box for advocating for business needs is straightforward, and we will only be successful protecting our rights with intention and coordination.
In my next set of posts, I’ll walk through specific issue areas where misinformation is threatening our freedom to fulfill market needs.
