In recent years, we have seen the evolution of companies' sustainability practices, with reservations, of course. The ESG acronym (environmental, social, and governance) has taken over the agenda of investors, consumers, and employees of corporations, but the moment seems to be one of regression with the return to the pursuit of profit at any cost. With Donald Trump's return to the U.S. presidency, we observe major corporations like Meta and the fast-food chain McDonald's retreating from their social practices. And the expectation is that all the priority areas of the ESG Agenda will be harmed.
There is no denying that the primary purpose of a company is value creation and that its perpetuity is related to economic performance. In this way, the acronym ESG should be EESG, where the economic comes first. After all, without funds or returns, there is no way to invest in social and environmental practices. The problem is that the sole objective cannot be to guarantee profit at any cost, as the company ends up putting its image and brand at risk. And, with the growth of social media, being away from the anxieties and demands of the population is a major problem and can lead to the cancellation and boycott, even if only temporarily, of the brand. There it weighs in the pocket.
About 10 years ago, specifically in August 2015, negotiations were concluded that led to the adoption, in September, of the Sustainable Development Goals (SDGs) during the United Nations Summit on Sustainable Development. On that occasion, an agreement was reached that includes 17 Goals and 169 targets, covering diverse sustainability topics ranging from issues such as poverty eradication and inequality reduction to inclusive economic growth. The agenda must be fulfilled by 2030.
Since the SDGs were launched, large corporations have embraced the agenda and improved their processes to meet the goals. For example, initiatives aimed at diversity, equity, and inclusion have become part of the hiring policies of companies of all sizes. This policy allowed people of various genders, races, with disabilities or neurodiversity to have opportunities in the job market, even though access to higher positions remains restricted.
On the company's side, hiring people with different profiles allows the organization to understand the peculiarities of its consumers, expanding the service network, sales, and consequently, profit. After all, a brand for everyone generates more value and greater long-term return.
However, this fact began to be questioned, and a wave of companies and institutions emerged. A recent survey released by the Conference Board, an American business organization with over a thousand members, shows that half of the companies have already adjusted their terminology for diversity programs, and another 20% are considering similar changes.
The McDonald's fast food chain is among the companies that have abandoned commitments to the so-called diversity, equity, and inclusion (DEI) objectives, halting the requirements for suppliers to adopt such practices. The decision comes after the United States Supreme Court ended the use of affirmative action in college admissions.
Meta also rolled back a series of policies in these areas and informed employees that they will no longer be required to interview candidates from underrepresented groups for open positions or to seek business with diverse suppliers. Walmart, Nissan Motors, Boeing, Ford, Toyota, and Harley Davidson have already followed the same path. Walmart announced that it will no longer use race and gender parameters to select supply contracts and has reduced training on racial equity. Other companies such as Johnson & Johnson, Coca-Cola, and Uber have removed or softened mentions of diversity criteria in their corporate reports regarding their compensation policies.
Here we take DEI programs as an example, but the regression to the 70s and 80s, when the focus was on ruthless profit-seeking, is evident in various areas of sustainability, whether social or environmental. Initially, the view is that such objectives generate expenses and not profit. A clear mistake when reputation is at stake. Rejecting sustainability is shooting oneself in the foot of society and the companies themselves. Profit at any cost costs a lot.
