Magnifying glasses
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As more companies and non-profits develop Environmental, Social, and Governance strategies, it was only a matter time before their actions in implementing them would come under scrutiny from activists, politicians, regulators, and the media. Few people could have predicted that it would happen with such force in the last weeks.
The Florida legislature swiftly removed Disney from its special tax status and reacted quickly to Disney’s pivot on the Dont Say Gay bill. While the final effect on local taxpayers remains uncertain, the swiftness with which Florida responded might give some pause to other businesses operating in the Sunshine state.
Georgia’s threat to remove a special tax exemption for Delta Air Lines in punishment for its CEOs criticism of the controversial new law that limits voting rights and ballot access puts the firm’s commitment to diversity, equity and inclusion at odds to the legislature in Georgia.
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Paul Krugman wrote this in a column in The New York TimesThese reactions effectively tell companies (and nonprofits) that it doesnt really matter how you conduct yourself or how innocent your behaviour is. We will find a way for you to be punished if you criticize or fail to act in a manner that is respectful of our cause.
Left-leaning activist organizations are increasing their exposure of companies that make promises and don’t fulfill them or engages in actions that seem to be against the spirit of those pledges.
Goldman Sachs Group was criticized for providing a $150m line of credit to Peabody Energy Corp. This activists claim is against its 2019 pledge to reduce fossil fuel financing. Goldman claims it has pledged to decline direct financing of new coal mines. This leaves the door open to other financial arrangements.
JPMorgan Chase is being questioned by activist groups. It has stated that it will hire an independent auditor to audit its $30 billion pledge for racial equity. This includes an $8 billion commitment, to originate 40,000 mortgages to Black and Latino households, and an additional $14 billion to create 100,000 affordable rental properties.
Even The New York TimesRecently, he posted a call for information on nonprofit organizations to share with a special reporter assigned to report on them. The Times A handy online form was created to assist citizen whistleblowers in completing the task.
All of this does not mean that scrutiny should be avoided. Companies and non-profits should be held responsible for their actions and should be subject to the consequences in the competitive market.
However, when leaders of companies adhere to their publicly-stated corporate values, by adopting policies, practices, and investments that are supported by their customers, employees, and investors, or when leaders of non-profits take actions that help the environment and the less fortunate in our society we should applaud them. We should also recognize the challenges these institutions face in fulfilling their ESG strategies.
