Brooke Rose, a 2021-22 Environmental Ethics Fellow, and Brian Green, director, technology ethics, both at the Markkula Center for Applied Ethics. Views are their own.
Environmental, Social, and Governance (ESG) investing is a way for companies to demonstrate their commitment to a more just and sustainable world. While the ESG movement is an admirable step in the right direction, ESG is still a young field with much development ahead of it. For ESG to achieve its full potential it should be expanded to include more diverse perspectives and beliefs about the ethical importance of the planet and differing conceptions of how resources ought to be shared. What could ESG become if it considered what it looked like for the Earth to belong to everyone?
ESG, which has emerged among Western notions of property rights, resource use, and consumerism, should take differing understandings of ownership into account so that corporations and their investors are more fully aligned with the ethical expectations of the societies in which they operate. By considering diverse views of environmental ownership and responsibility, ESG can become a truly global movement and thereby do even more for the world’s transition towards a more equitable, sustainable future.
Current Relationship Between Business and Planet
Since the industrial revolution, the relationship between humans and the environment has been rapidly deteriorating. Businesses have prioritized profit over the planet and people, exploiting the Earth and fellow human beings in order to extract resources and labor. Most of current environmental degradation comes from the hands of those in the Global North, who through colonization and current neo-colonial efforts have often taken more than their fair share of resources. Unjust business practices are resulting in current environmental issues and human rights violations. Companies like Adidas and H&M are still using sweatshop labor to produce their products, which are infamous for their deplorable working conditions, use of child workers, and use of harsh chemicals that affect water safety [1]. The Carbon Majors Report found that 100 companies are responsible for 71% of greenhouse gas emissions [2]. Greenhouse gas emissions are causing climate change, which in turn results in rising sea levels, reduced resilience to natural disasters, and damage to food production.
ESG can provide a sort of moral compass for companies as they reach towards greater environmental sustainability and social justice goals. However, ESG is still limited in its cultural perspective and could do more in order to be broadly inclusive of other perspectives. With these improvements, ESG can act as an ethical facilitator between business, consumer, and planet.
Beliefs and Theories in Favor of the Environment
ESG has been growing in popularity because both employees and consumers are demanding it. This is no surprise, because there are plenty of reasons for humans to care about the well-being of the environment. All the major religions, and many other worldviews, have some sort of connection to nature and guidelines on environmental stewardship. Many social theories, cultures, and psychological studies also indicate the importance of caring for our environment.
Indigenous Australian Practices
Indigenous cultures across the world hold a reverence and care for the environment that stands in opposition to much of today’s industrialized and commercialized world. A group of researchers working with indigenous Australian groups learned about the practices and beliefs of these communities in order to improve natural resource management in the area. They found five guiding principles that drove community members to think about the environment and use its resources: 1) the connection between the environment and people of past and present, 2) ancestral traditions about environmental stewardship, 3) union with the environment, 4) dependence on the environment for human health and well-being, and 5) the importance of sustainability to ensure it can continue providing sustenance [3]. The use of these eco-centric principles in this indigenous community indicates the importance of respecting the environment, and how human lives are connected to the well-being of the planet. These indigenous principles are relevant for ESG because they incorporate longer time horizons and convey human connectedness to the environment rather than separation.
Hinduism
There are many ideas in Hinduism that advocate for caring about the environment. Many Hindus believe that humans and nature coexist, and that one cannot destroy nature without destroying humans too [4]. Karma and reincarnation are two ideas central to Hinduism. Karma, which is the belief that all actions bring consequences, is related to reincarnation because the law of karma can apply to many lifetimes: if people do negative things in this life, it may impact their next reincarnation. These beliefs can help encourage Hindus to accept responsibility for how they treat the environment.
Christianity
Within Christianity, one concept that stands out is “the universal destination of goods.” In Catholic social teaching, the universal destination of goods refers to how the goods of creation were made for the benefit of all of humankind. This idea comes from the creation story of Genesis 1, where it is detailed how God created both Earth and humans, giving the Earth to humans so they might have dominion over it and enjoy its fruits. According to Pope John Paul II, God gave the Earth to the whole of humanity, without favoring or excluding anyone, and that the Earth “is God's first gift for the sustenance of human life” [5]. When considering ESG, this would mean thinking about how resources should be shared widely and not merely for the benefit of the few.
Islam
Islamic beliefs also hold respect for the natural environment [6]. In Islam, Allah created everything in balance, and this includes the Earth and all its living creatures. In the Quran, Allah says: “The sun and the moon both run with precision. The stars and trees bow down in prostration. He erected heaven and established the balance, so that you would not transgress the balance” (Ar-Rahman, 55:5-8). Any sort of harm or abuse of natural resources will affect this balance that Allah was so intentional in creating. For ESG, this would mean thinking of balance when using environmental resources, and not merely dismissing the health of the environment.
Conflict Theory
Social theories are philosophical tools to help understand how society is structured, and conflict theory is one of the major paradigms utilized in sociology. An example of a useful tool is conflict theory, which believes that as competition occurs between social groups for scarce resources, inequalities follow [7]. Conflict theory identifies the inequality in the distribution of the world’s resources as the source of many environmental problems, as well as the role of multinational corporations in resource extraction and the unequal accumulation of wealth as a result. With respect to ESG, these inequalities call on businesses and governments to have stronger regulations and guidelines for how to interact with the Earth in a way that is just.
Land Ethic
When considering environmental ethics, it is impossible to not mention Aldo Leopold’s seminal idea of the land ethic [8]. A land ethic expands the definition of community to include not just humans, but all parts of the Earth; plants, animals, soils, and waters, which is what Leopold called “the land.” Leopold envisioned a world where the relationship between people and the land are so intertwined that care for people cannot be separated from care for the land. This land ethic would be a moral code that emerges from these interconnected relationships of care.
In the world, billions of people share these perspectives on the environment, and we can assume that many of them would like their values for the environment to be respected by corporations. We already know that there is a strong desire among consumers for greater environmental consciousness, since that is one of the reasons that ESG exists in the first place. Given these two facts, how can ESG be a bridge between businesses, consumers, and the planet?
ESG Done Wrong and Right
One of the biggest critiques of ESG is the lack of consistency. If there are no clearly defined standards that all companies can hold themselves accountable for, then it makes it difficult for transparency to exist between businesses and consumers. By comparing two companies who have consistently received positive ESG ratings, we can see the discrepancies within ESG. I have chosen companies that were not created with sustainability at the forefront and exist in two of the most profitable industries today (oil and technology), to demonstrate how the shift to ESG can be achieved.
Chevron
Chevron is the world’s second largest polluter; however, they can still be found receiving high ratings on ESG lists and are seen as an industry leader in ESG [9]. In their 2021 Climate Change Resilience Report, CEO Michael Wirth states that Chevron’s goal is to “be a leader in efficient and lower carbon production of traditional energy, in high demand today and for years to come, while growing low-carbon businesses that will be a bigger part of the future.” While it is admirable that they want to be a part of a low-carbon future, this statement indicates that they only have a desire to prioritize low-carbon businesses once the market demands it and it becomes inevitable, rather than wanting to take active steps now to be sustainable.
Chevron also has a long history of causing harm to the environment and marginalized communities, both abroad and in the US. From 1964 to 1990, the company dumped 16 billion gallons of toxic waste into the Amazon rainforest, degrading the lands and waters of Indigenous and rural Ecuadorians. More recently, in February 2021 Chevron spilled 600 gallons of oil into the San Francisco Bay next to Richmond, CA over the course of 2 hours [10]. This is just one recent incident of Chevron’s environmental and health effects, as they have consistently been a hazard to the health of Richmond residents. The Richmond refinery is one of the largest polluters in the state, and from 2008 to 2018 state records indicate that the refinery released nearly the same amount of greenhouse gas emissions over the ten year period [11].
How can Chevron paint themselves as a champion of ESG when they are doing this kind of harm to the planet and its people? Perhaps more importantly, how can this company whose business model is built on the extraction, sale, and eventual burning of fossil fuels (and claim to have their interests in a greener future) possibly have a high ESG rating? This discrepancy points to a fundamental flaw in contemporary ESG: words speak louder than actions. Through Chevron’s marketing and gesturing towards environmental progress, they are able to receive credibility as a sustainable enterprise when they clearly are not.
From the many diverse perspectives above we could see how Chevron might be vulnerable to several harsh critiques. For example, burning fossil fuels harms the shared good of the atmosphere and climate which many cultures care deeply about. Chevron’s acquisition of oil demonstrates little care for how it leaves less resources for future generations or how the burning of fossil fuels leads to climate and health effects that disproportionately affect those who are already facing inequalities. This runs afoul of many perspectives on the environment, perhaps most noticeably conflict theory, which cares specifically about inequality.
Microsoft
Microsoft is one of the largest technology companies in the world, producing computer software, consumer electronics, personal computers, and more. In their 2020 Environmental Sustainability report, Microsoft identified four areas - carbon, water, waste, and ecosystems - that they will focus their efforts to minimize the negative environmental impacts of their operations and maximize the positive impacts of their technology [12]. Because of these intentions, Microsoft has been seen in the top ten of several ESG ratings lists, and for good reason. The company has been carbon neutral since 2012, is one of the largest purchasers of renewable energy in the nation, and their Puget Sound campus has been zero waste certified since 2016, thus demonstrating that their commitments are more than just intentions.
In Microsoft’s 2020 Environmental Sustainability Report, president Brad Smith discusses why the company had made the shift, which came from three central questions:
- Are we doing enough?
- Can we make a difference?
- What should we do?
In response to the first question, the simple answer was no. But what might be more important is the answer to the second question, which is yes. The first step to action is the recognition that you have the power to enact change. Microsoft believes that they can drive change for good rather than bad. In order to achieve the sustainable world they envision, they are changing their operations and their relationships with organizations and institutions around the world. Microsoft has made a series of industry-leading commitments to be a carbon negative, water positive, and zero waste company by 2030. Perhaps the most impressive among Microsoft’s sustainable goals is removing from the environment all the carbon the company has emitted since its founding by 2050. This goal demonstrates not only that Microsoft is admitting accountability for their actions over their history as a company, but also that they are trying to make up for their bad actions. If Chevron did this it would be a very heavy lift, but it would also all the more impressive for admitting their mistakes and attempting to make amends.
While these commitments might seem like mere talk, with full accountability decades in the future, the fact that Microsoft has already made some commitments and fulfilled them does lend confidence to the idea that it might make good on these future goals too.
From the perspective of various cultures examined above we might also see that Microsoft is being a good environmental steward. Considering the beliefs from various faith backgrounds, an important part of living out religious values is engaging in a process of discernment, which is similar to the process that Smith went through when reviewing Microsoft’s ESG strategy. Microsoft has acknowledged the dependence of human life on the wellbeing of the environment and is working to preserve natural resources for humans now and to come.
Conclusion
ESG is a good first step for businesses to claim their role in creating a more sustainable future, but ESG can and should be so much more. Integrating diverse perspectives of environmentalism around the world will help to ensure that the Earth, its resources, and its people are taken care of for years to come. This broad-based approach to environmentalism will also help to make corporate ESG activities more comprehensible and appreciable to people and cultures around the world. The Earth belongs to everyone. Businesses can no longer continue to act as if only wealthy Western perspectives count because their operations and impacts are clearly global and affect people globally. Earth’s natural resources are not infinite, and many are diminishing every day. Developing ESG practices that are informed by science and acknowledge the wellbeing of all people will be key in having businesses become a part of solving Earth’s environmental crisis.
Sources
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