ESG Has a Trust Deficit & Here’s Why

What do we mean by ESG?

Investopedia offers this summary: Environmental criteria consider how a company safeguards the environment, including corporate policies addressing climate change, for example. Social criteria examine how it manages relationships with employees, suppliers, customers, and the communities where it operates. Governance deals with a company’s leadership, executive pay, audits, internal controls, and shareholder rights. The conversations around the role of “S” (how companies treat their stakeholders) and “G” (how they are governed) have recently come into focus and for good reason.

What do we mean by a “trust deficit.”

At Trust Across America-Trust Around the World (TAA-TAW) we consider trust as the “outcome of principled behavior.” If the principled behaviors are absent, a trust deficit is created.

What is Causing the ESG Trust Deficit?

Reading the current headlines one might concluded that the ESG trust deficit is “all political.” That one side wants ESG and the other does not, and so one group is “right” and the other is “wrong.” But while politicizing ESG may be convenient for some, blaming politics ignores the root causes of the trust deficit (the behavioral ones), and they are plentiful.

The Employee Perspective

According to the Public Affairs Council members of the public don’t trust corporate CEOs as much as they trust the companies these CEOs lead: 47% place a lot of…