Corporate chiefs hit back at ESG sceptics as proxy season gets underway
As the anti-ESG movement swells, prominent CEOs are starting to hit back at green sceptics by reaffirming their commitment to sustainable investment strategies
Despite divisive politics in which ESG initiatives are finding themselves more and more under attack, leading executives of some top companies increasingly speak out in support of corporate responsibility ahead of annual stakeholder meetings during the 2023 financial reporting season.
As corporations make public financial disclosures for the first quarter and the proxy season gets underway, JP Morgan Chase & Co Chairman and CEO Jamie Dimon is the latest executive to support corporate responsibility and an ESG-influenced strategy.
In his 2023 letter to shareholders, does not beat around the bush as Dimon's unmistakenly reaffirms his commitment to green corporate policies and to implementing a sustainable investment strategy.
His letter matters: The global financial services giant manages assets worth more than $3.2 trillion and has extensive operations worldwide. JPMorgan Chase's annual meeting of shareholders is scheduled for 17 May.
“Research has shown that purpose-driven companies achieve stronger business results and have greater impact by doing better for their customers, employees and shareholders," Dimon wrote to shareholders.
Dimon's pro-ESG call comes despite JP Morgan Chase still being one of the world's largest funders of fossil fuels, according to SNEG data published in December. The bank has continued to finance new fossil fuel investment in recent months.
Nevertheless, the CEO's fightback is remarkable, as many corporates are much more used to fighting the opposite battle, namely advising their shareholders to dismiss and reject climate-related motions from activist shareholders.
It seems the name of the game is changing.
Black is the new green as anti-ESG sentiment swells
Chorus of executives
Having studied Dimon's letter for Net Zero Investor, Carolyn Berkowitz, president and CEO of the Association of Corporate Citizenship Professionals (ACCP), a leading advocate for corporate social impact professionals, pointed out that "as one of the world’s largest financial institutions, JP Morgan Chase Chairman and CEO Jamie Dimon is in a growing chorus of executives in 2023 who continue to double down on making a strong business case for corporate citizenship."
“The political pushback against ESG by politicians more interested in elections than sound policy is being rejected in the boardrooms of top corporations because the data clearly shows that being good corporate citizens is good for business," she added.
In recent months, ESG has found itself subject to a more sustained, and directly political, attack.
Perhaps the most notable critic is former BlackRock sustainability head turned 'whistleblower' Tariq Fancy, who said earlier: “In my role [at BlackRock], I was helping to popularise an idea that the answer to a sustainable future runs through ESG and sustainability and green products, that the answer to the market’s failure to serve the long-term public interest is, of course, more market.
In addition, last year former US Vice President Mike Pence wrote an article in The Wall Street Journal on the topic of how “Republicans can stop ESG Political Bias."
Within this, Pence urged for the “radical ESG agenda” supposedly being pushed by the likes of State Street, BlackRock and Vanguard to be curtailed by direct government action.
In his letter, Dimon directly dismissed this notion, writing that “as a free-enterprise and free-market capitalist…” he “finds nothing inconsistent with the multifaceted ways we use our capabilities to lift up our communities.”
Berkowitz said in agreement that “in his annual letter to stakeholders, Dimon links the competitiveness of the U.S. and his company to policies, investments, and practices that uplift communities, power economic growth, and re-establish the American promise of providing equal access to opportunity for all."
Dimon's statement is backed up by a report from KPMG, illustratring the real impact of investing in CSR and ESG efforts.
The report found that "with the potential recession testing CEOs’ commitment to their ESG strategies, reducing investment may lead to long-term financial risks."
The auditing giant explained that "this test comes at a time when CEOs have made significant strides in tying ESG to profitability, with 70% of U.S. CEOs saying that ESG improves financial performance, compared to 37% last year."
No empty threat
Despite KPMG's report and similar reseach, the anti-ESG movement is no longer an empty threat, at least not in the US: concrete measures and specific proposals have entered into Republican-held state legislatures across the US.
In September 2021, the Texas legislature passed Senate Bill 13, which prohibits the state’s use of asset managers which otherwise “boycott” oil and gas firms due to any ESG-based metrics.
Moreover, in March last year, 20 large asset managers including BlackRock, JP Morgan Chase and even non-US firms such as Sumitomo Mitsui Trust Holdings received letters from Texas Comptroller Glenn Hegar, asking whether they do “boycott” such energy firms, and how they consider fossil fuel investments.
Meanwhile, in Kentucky, a January 2023 bill warned 11 large financial institutions including Schroders, BlackRock and HSBC that they will be subject to divestment if they also continue to “boycott” fossil fuel companies.
And only last month, Florida introduced state-level legislation which blocks the use of ESG in all investment decisions at the state and local level, and eliminates consideration of ESG factors by state and local governments when issuing bonds.
Giving his support for the bill, Florida House Speaker Paul Renner said: “We will not allow these martini millionaires to push unsafe and unsound investment practices that silence debate in the political process, weaken investment strategies for Florida retirees, and discriminate against any individual’s beliefs.”
This move followed from an action taken by the Sunshine State in December 2022, divesting $2bn worth of assets currently managed by BlackRock due to the company’s ESG strategy.
All these measures are reason for Berkowitz to argue that "it’s time for politicians weaponizing the ongoing movement towards diversity, equality and inclusion and environmentalism to drop the charade and join top CEOs who are strengthening our economy by comprehensively addressing income inequality.”
"Despite an uncertain economy, corporate leaders in all industries should heed Dimon’s advice and continue strong investment in the functions within their companies that ignite their corporate responsibility strategies," she concluded.