"The ESG Wars": Presentation of the University of Dundee (Scotland)

 

It was my great delight to have been able to deliver remarks to students and faculty at the University of Dundee. The event was organized by the remarkable Claire Methven O'Bien (Dundee Law School, School of Humanities, Social Sciences and Law). 

The remarks, entitled "The ESG Wars" considers the context and consequences of the movement toward the insertion of Environmental, Social, and Governance (ESG) risk/impact factors in a variety of contexts around investment, economic activity, and the management of systemic risk. This, in turn, is aligned with movements toward private and public efforts to achieve convergence with human rights, sustainability, and climate change related principles, and to embed these risk/impact parameters through mandatory measures. The result has been the transformation of ESG from risk to impact measures, and its reconstitution as a platform within which producers and consumers of risk and related standards of acceptable decision making within risk parameters, is sketched out.

To that end, the evolution of the character of ESG from an investment risk assessment devices toward more comprehensive systems for the evaluation of project risk, and as a means of implementing risk reduction cultures grounded in the principle of prevention-mitigation-remedy was discussed.  The application of ESG as risk factors bearing on financial decisions making, decisions to engage in specific projects, the use of ESG risk assessment as impact measures guiding decisions abut internal operations and corporate business, and its use in organizing the private law of production chains, is considered. This project of ESG as a risk based form for guiding decision making is weakened by fundamentally imortant challenges. These include issues f definition coherence, variation in methods of assessments, data quality, scope of application, scalability, comparability, and liability consequences.  The effects of growing and robust markets in ESG assessments suggest challenges to the character and utility of ESG modalities as a means of nudging cultures of acceptable business behaviors and forms of decision making.  That, in turn, requires unpacking the great utility of ESG--as a vessel through which ideological battles over the normative structures of economic activity can be undertaken beyond the spotlight of democratic engagement and in the shadows of apparently technical methodological techniques. At the same time, the utility of ESG as a vessel for undertaking this ideologically charged narrative of economic activity (including the role of markets, acceptability of risk taking, the profit principle, and corporate purpose) narrative is undertaken. Here, one encounters a continuation of the underlying normative battles over the meta-narratives of a half generation of soft law measures--the SGDs and the UN Guiding principles for Business and Human Rights among them--and their implications (through the language and modalities built into ESG of risk-response principles) for rationalizing economic activity as social and political instruments.  The remarks ended with a consideration of current (US) efforts to challenge this ideological project.

The PPTs prepared in aid of the remarks follow.  Posting of the recording will be made available when ready. The PPT may be downloaded HERE.