ESG as a trending naming convention
After decades relegated to use by investors, ESG’s rise was smoking hot in recent years. The terminology takeover hit in multiple places: departments changed names, titles changed, jobs were created, products were built, conference sessions were formed, and more. Eventually, attention came from not just those in the corporate sector, but also those in the public sector. The attention on “ESG” as a terminology has the feel of dance challenges on TikTok (everyone tried it whether or not they can dance). We’re now seeing ESG fall out of favor as the preferred word or terminology used to describe our field. ESG as the trending name for changing corporate behavior has rung the bell on the gymnasium ceiling and is about to start its climb down.
The work is distinct from the words
Before jumping to what’s next, it’s important to separate *the work* from *the words*. The work grows steadily each year and will integrate fully into business operations especially as the next generation rises into leadership positions. The columns on the good work chart are only getting higher with an arrow pointing up. The signs the work is increasing are many. Non-financial reporting will be codified by global standard-setting bodies. Accounting firms have expanded entire business units to meet the new requirements for environmental and social issue reporting. Companies are staffing up and as millennials climb higher on the corporate ladder, the work moves from a silo to day-to-day decision-making across multiple departments. This gives most of us who have worked in the field some peace when we’re shaken up by the noise coming from unethically-motivated media moments attempting to build an agenda around something most don’t fully understand.
Prediction: More Frequent Use of the Word Stakeholder
Now let’s talk about what could come next. The longer I work in the field, the more I find myself patiently witnessing the rhetoric. My stance while observing is hopeful that media messages will contribute to results, not create a distraction, or worse, take resources in the wrong direction. With that in mind, I have my eye on the increasing use of the word Stakeholder. There are several examples out there already and I predict the number of examples will increase each year. Especially as more companies recognize that modern business growth requires renewed attention on justice and less planetary extraction. Here are a few:
Salesforce’s Stakeholder Impact Report,
Harley Davidson’s Inclusive Stakeholder Management Report
Norms in Business Writing
Regardless of the trending term, the purpose-driven professionals in the corporate world nudge companies’ decision-makers to factor people in more and factor profits in less. The norm in the corporate world is to refer to humans as “stakeholders.” As businesses take employees and community leaders more into account in decision-making, they’ll seek to represent that in reporting – and some iteration of *stakeholder* will feel like a safe and strategic way to express that. We can’t talk more plainly about different groups of people, because the word stakeholder ensures a capitalistic principle is maintained. We aren’t thinking about EVERYONE. Just those that have a stake in our business.
Stakeholder is a Good Indicator of Deeper Integration
The use of the word stakeholder won’t be limited to reporting. I think it will also show up as the process of materiality analysis evolves. Currently, at the most basic level, materiality analysis assessments produce a list of issues. In the future, that list may be represented (prioritized) in multiple ways depending on which stakeholders’ point of view is most significant for the effort underway. That leads to adjustments in decision-making, resource allocation, staffing, product roll-out, employee communications… the list could go on. There is a frequently used talking point on conference panel discussions: “someday we won’t say sustainable investing, we'll just say investing.” That full integration of modern thinking comes back to caring about people more, sometimes at the expense of a slightly higher dividend. And the next evolution of that movement, our movement, will be led by stakeholder-driven thinking.