A recent post by Aswath Damodaran (which title is worth quoting: The Siren Song of Sustainability: The Theocratic Trifecta’s Third Leg! no emphasis added) got me thinking for while. Of course, I’m not going to let myself be convinced by anyone that sustainability is just a load of rubbish – I do what I do and I’m not that cynical. But I’m not a bigot and I like debating with the devil’s advocates once in a while.
Even if I disagree with his conclusions, Damodaran makes at least one very valid point: sustainability is confusing and the term ‘ESG’ got a bad rap. It would be difficult to find a proof of the contrary. I don’t think you can honestly say that you can ask 20 people around your firm and get the same definition of sustainability from the majority of them. I also believe that, unfortunately, the ‘win-win’ nature of ESG has been exaggerated (not always on purpose, but still) and that the acronym has been abused for commercial purposes (SOME people have done that, yes).
One of the issues is that people have used both terms interchangeably, and they still do, especially in places where the idea of maximising short-term financial profits at all cost is still so popular. So, if we stick to the idea behind the terms, the notion that businesses and investors should do more than purely line their pockets in an selfish and short-sighted manner, then should we do something about the terms we use?
It seems weird to eliminate the word ‘sustainability’ altogether. After all, it’s not really jargon. It is literally “the ability to sustain” something. But perhaps it is time to sacrifice the good old ‘ESG’ acronym. It was never designed to be a battlecry anyway. Originally, it was just an easy way to remember a set of metrics. It rolls off the tongue better than other letter combinations but it wasn’t supposed to describe an investment style, even less a political movement.
But should we really ban a word, even if it is just a mere acronym? Semantics is a great way to change the topic, to distract from the actual underlying issues. It does pose the risk of limiting freedom of speech to a certain extent. The tendency to euphemise or ostracise the use of certain words is also a powerful political tool and we would do well to remember Orwell’s warning: “The whole aim of Newspeak is to narrow the range of thought. In the end, we shall make thoughtcrime literally impossible because there will be no words in which to express it,” he writes in 1984.
Wait a second! Isn’t ‘ESG’ a piece of Newspeak anyway? It depends which side of the political divide you think most resembles a dystopian totalitarian regime I suppose. But let’s admit that, even if it was first coined as a technical term, ESG has been used by its proponents as a generic term to describe something more than just a sum of data points. It was also used for marketing purposes to describe something positive but also abused and heralded by quasi-fanatics. Just like the original use of the term ‘woke’ was once meant to carry only a positive connotation, it has now been adopted as a derogatory term by its opponents and it has lost its original appeal. If we were in Oceania, wouldn’t we legitimately want to kill the term ‘thoughtcrime’, an equally ambiguous term? Well, probably not because we would all be so good at ‘doublethink’.1
I’m not very good at doublethink, so I’ll continue to believe in sustainability but I won’t be the one fighting for ‘ESG’ as a term. I’m happy to sacrifice it and kill it (or rather letting it die softly) if necessary. Let’s focus on what is important instead. The only thing I’ll keep is my weekly ESGPresso!
1. “Doublethink means the power of holding two contradictory beliefs in one’s mind simultaneously, and accepting both of them.” – George Orwell, 1984↩
