For companies to survive, more than producing and making a profit is required. If a company wants to create a sustainable future, it must value environmental impact, diversity, inclusion, ethics, and transparency. Stakeholders and investors now also look at whether companies have the responsibility. Research has shown that 87% of consumers are more likely to purchase a product from a company that advocates for an issue they care about. It showed that 76% would refuse to buy a product when they learn that a company supports a problem that goes against their beliefs.
The most extensive guide for a company to gain the title of the response is the ESG criteria. Environmental, Social, and Corporate Governance, that is, ESG, is used to measure the sustainable assets of companies while making investment decisions for investors and stakeholders and to calculate the risks related to these assets. The ESG industry has reached an investment value of 53 trillion dollars globally, and this figure is predicted to double by 2026.
Recently, the U.S. House and Senate passed legislation overturning Department of Labor rules to ensure that fund managers can consider ESG factors when investing. President Biden used his first veto against this law. This veto has been described as an extreme left move. The law, which must be implemented, wants to prevent investors from investing with ESG incentives. ESG investments have been tried to be interrupted many times during the Trump era. Climate change is the most significant risk facing global markets in the long run. Therefore, investors needed a clear financial incentive to invest in the best-positioned companies to maximize their long-term returns.
ESG investors tend to overemphasize carbon-intensive industries, including oil companies. Executives of these companies are concerned that the ESG settlement is putting pressure on share prices. There are optimistic hopes that discouraging ESG investments could boost these stocks.
The decline in the shares of most bureaucrats in the House and Senate in the fuel sector due to ESG has turned into a political storm. Republicans aim to reach undecided voters by presenting anything climate-conscious for the 2024 election as part of a far-left agenda. Legislators in the country's states also support this effort. Most ESG investors are denylisted or restricted. No matter how mainstream the anti-ESG campaign has become, ESG investments are increasing daily. No matter how hard the Anti-ESG advocates, who argue about issues such as greenwashing, try, they cannot win against newly developed systems such as the CSRD in Europe. The language of political hatred that these companies use at the expense of their survival increases their costs and causes a decrease in profits because the people will continue to keep the companies working at the expense of saving the world.
Author:
Çağın Ergün
Comments