Two days after the US election, I moderated and participated on a Society of Corporate Compliance and Ethics (SCCE) panel on  ESG through the life cycle of a business with Eugenia Maria Di Marco, who focused on startups and international markets, and Ahpaly Coradin, who focused on M&A, private equity, and corporate governance.

I shared these stats with the audience before we delved into the discussion:

  • Elon Musk, who may have significant influence in the Trump administration, has stated, “ESG is a scam. It has been weaponized by phony social justice warriors.”
  • The SEC’s climate-risk disclosure rule is already facing several legal challenges and may not survive. 
  • An open letter from the Attorney Generals of 13 states following the Supreme Court’s SFAA decision re race warned Fortune 100 CEOs that companies using  DEI to “engage in racial discrimination should and will face serious legal consequences.”
  • AGs from 21 other states reassured CEOs that diversity and inclusion programs “comply with the spirit and the letter of state and federal law” and actually “reduce corporate risk for claims of discrimination.”
  • As of September 2024, about 20 states have enacted anti-ESG legislation.
  • In July 2024, SHRM, the largest professional HR association with nearly 340,000 members in 180 countries, announced it was officially eliminating ‘Equity’ from ‘Inclusion, Equity, and Diversity.’ 
  • The Loper Bright decision, which eliminated Chevron deference may:
    • Hinder federal agencies like the EPA, Department of Labor, FTC, and SEC from effectively implementing and enforcing ESG regulations.
    • Increase litigation risks for companies facing challenges to ESG-related rules and disclosures.
    • Create regulatory uncertainty, leading to inconsistent judicial interpretations and complicating compliance efforts.
  • Many U.S. businesses and lawmakers have raised concerns about the extraterritorial impact of EU due diligence and sustainability reporting regimes. 

And what about consumer behavior? McKinsey & Company reported in July 2024 that consumer interest in ESG issues is declining across generations:

  •  Gen Z consumers in five of six surveyed countries have lost interest in ESG, with a decline of five points since 2023.
  • Millennials’ consideration of ESG in purchase decisions has also declined.

Yet, there’s a silver lining for ESG supporters:

In early November, Thomson Reuters released the State of Corporate ESG report. 71% of survey respondents agree or strongly agree that ESG investment is a source of competitive advantage, up from 60% in 2023. 82% believe that the role of ESG in corporate performance will continue to grow.

Given this complex landscape, how should companies rethink strategies in light of these shifts?

In a future post, I’ll share some insights from our conversation.