Originally published in Carroll Capital, the print publication of the Carroll School of Management at Boston College. Read the full issue here.
With critics on all sides and regulators breathing down on them, companies looking to do the right thing are still pushing ahead on social and environmental issues. But they’re doing it a little more quietly.
That’s according to a newly released report by the Boston College Center for Corporate Citizenship. In the biannual survey, nine out of 10 executives reported that during the previous two years, leaders in their company had taken a stand on ESG (environmental, social, and governance) concerns—a robust 54 percent increase since 2020. Approximately 850 senior-level executives participated in the survey.
Katherine Smith
At the same time, these leaders are turning down the volume. “Some are stepping back from the marquee, but they’re not stepping back from social and environmental investments,” says Katherine Smith, executive director of the center, which is the largest organization of its kind with 500 corporate members that bring almost 10,000 employees to its programs each year. Quieter steps range from improving gender-equity policies to reducing plastic waste, moves that also align with business goals like employee retention and cost saving.
Companies are also shifting their public advocacy. The center’s “State of Corporate Citizenship” survey shows that in 2022, corporate leaders were voicing a clear stand on gender and racial equity and inclusion. That remains a central priority for the companies, but now their public statements are more likely to highlight issues like sustainability and climate change, which are viewed as less controversial. Still, because ESG in general has become a political hot potato, that, too, is a softer message.
These changes reflect the intense pressure companies are under from various quarters, according to Smith. Corporations are facing the competing demands of employees, activists, and politicians of all political stripes. “It’s a sea shift in the ESG space, and we’re experiencing the storm of that shift right now,” Smith says.
“There's a lot of frustration about the continued fragmentation of reporting standards. Right now, it's the wild, wild West in terms of how companies are addressing these issues.”
On the regulatory side, new rules in the European Union are taking effect, and US companies are not prepared, Smith says. While US laws focus mainly on greenhouse gases and carbon emissions, the EU’s Corporate Sustainability Reporting Directive is more sweeping. It calls for a clear and comprehensive picture of what companies are doing on social and environmental issues.
American firms doing business in Europe, including many members of Smith’s organization, will be expected to comply. Some are scrambling to understand the requirements—but others are looking away. That’s partly because the regulations are complicated, with a raft of standards, each with its own requirements. “So there’s a lot of frustration about the continued fragmentation of reporting standards” in both the EU and US, Smith says. “Right now it’s the wild, wild West in terms of how companies are addressing these issues.”
