In recent years, we have seen the evolution of companies’ sustainability practices, with reservations, of course. The acronym ESG (environmental, social, and governance) has taken over the agenda of investors, consumers, and corporate employees, but the current trend seems to be regressing with the return of the pursuit of profit at any cost. With Donald Trump’s return to the presidency of the United States, we have observed major corporations like Meta group and the fast-food chain McDonald’s backtracking on their social practices. The expectation is that all priority areas of the ESG Agenda will be harmed.
There is no denying that the primary purpose of a company is to generate value and that its longevity is related to economic performance. Thus, the acronym ESG should be EESG, where the economical aspect comes first. After all, without cash flow or return, it is not possible to invest in social and environmental practices. The problem is that the sole objective cannot be to ensure profit at any cost because the company ends up putting its image and brand at risk. And, with the growth of social networks, being far from the anxieties and demands of the population is a significant issue and can lead to brand cancellation and boycott, even if temporary, which hits the wallet.
Approximately 10 years ago, more 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. At the time, an agreement was reached that includes 17 Goals and 169 targets, covering diverse sustainability themes ranging from issues such as poverty eradication and reduction of inequalities to inclusive economic growth. The agenda is to be fulfilled by 2030.
Since the SDGs were launched, major corporations have embraced the agenda and improved their processes to meet the goals. Initiatives in diversity, equity, and inclusion have become part of the hiring policies of companies of all sizes. This policy has allowed people of various genders, races, disabilities, or neurodiversities to have opportunities in the job market, even though access to higher positions is limited.
On the business side, hiring individuals with different profiles enables the organization to understand the specific needs of its consumers, expanding customer service networks, sales, and, consequently, profits. After all, a brand for everyone generates more value and greater long-term returns.
However, this fact began to be questioned, and a wave of companies and institutions. Recent research released by the Conference Board, an American business entity with over a thousand members, shows that half of the companies have already adjusted their terminologies for diversity programs, and another 20% are considering similar changes.
The fast-food chain McDonald’s is among the companies that have abandoned commitments to diversity, equity, and inclusion (DEI) goals, discontinuing requirements for suppliers to adopt such practices. The decision comes after the US Supreme Court ended the use of affirmative action in university admissions.
Meta has also backtracked from 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 seek business with diversified suppliers. Walmart, Nissan Motors, Boeing, Ford, Toyota, and Harley Davidson have already followed the same path. Walmart announced they will no longer use race and gender parameters in selecting supply contracts and reduced racial equity training. Other companies like Johnson & Johnson, Coca-Cola, and Uber have removed or softened mentions of diversity criteria in their compensation policies in their corporate reports.
Here we take DEI programs as an example, but the regression to the 70s and 80s, when the vision was profit-searching without scruples, is evident in various areas of sustainability, whether in the social or environmental field. Initially, the vision is that such goals incur expenses and not profit. A clear misconception when reputation is at stake. Rejecting sustainability is shooting society and companies in the foot. Profit at any cost costs a lot.
