Only 6% of US firms have significantly changed sustainability approach in response to ESG backlash

Survey of sustainability execs highlights worry about widening gap between state and federal policy

Only 6% of US firms have significantly changed the way they approach sustainability as a result of the clampdown on ESG, according to a survey of senior executives. 

A survey of 125 sustainability leaders at large American firms revealed that, while 80% said their companies had been influenced by anti-ESG sentiment, most characterised consequent changes as either minor (45%) or moderate (29%).  

Just 6% called them significant.  

The most common shift was around communications, including ditching the term ‘ESG’. Nearly half (48%) said they had ramped up legal and risk oversight, and 43% have focused more of their sustainability efforts on generating a return on investment for shareholders.  

Despite the widespread focus on the anti-ESG movement, three-quarters of respondents said their companies have experienced either no (35%) or limited (39%) backlash.  

“For most, the issue remains a monitoring and communications challenge rather than a material operational risk,” concluded The Conference Board, the membership body that conducted the survey. 

The results also highlight concerns about the “escalating regulatory fragmentation” between the federal and state-level rules in the US, with 90% of sustainability execs expecting national lawmakers to reduce environmental and social requirements in the next couple of years, and 43% anticipating an increase in demands by states.  

Climate targets are expected to be the main focus of the pushback, followed by climate disclosures.   

Evidence of the fragmented US policy landscape can be seen in the recent decision by the Securities and Exchange Commission to abandon its climate disclosure rule, at the same time as California introduces one of its own.  

This leaves firms in a position where they “must manage diverging and often conflicting sustainability expectations from employees, consumers, investors, and regulators with greater precision and pragmatism,” The Conference Board said.  

Just 14% of respondents to the survey foresee a reduction in requirements from overseas lawmakers, with half believing these will increase.