THE CITY appears to be losing its battle to explain ‘ESG’ to normal Brits as precious few claim to know what the Square Mile’s favourite acronym even means, a new survey has suggested.
Just 13 percent of the British public have a ‘good understanding’ of what ESG is – up only one percent on last year – in a sign that bosses may have failed to properly explain the term, according to a survey by City comms outfit SEC Newgate.
While awareness of ESG is on the rise, still under half of people have actually heard of the acronym despite it dominating corporate lingo for the past five years.
The numbers paint a troubling picture for the understanding of ESG topics despite City firms scrambling to win green credentials in the eyes of the public. More Brits even claimed to have even been visited by aliens, according to a 2021 survey conducted by polling firm YouGov.
Laura Houet, partner at law firm CMS, said “the term ‘ESG’ is at risk of being so overused in such a wide variety of subjects as to become meaningless and potentially off-putting to investors”.
However, the wide-ranging poll by SEC reveals the country is cottoning on to rampant greenwashing by corporate Britain as some 58 percent of respondents flagged it as a big issue.
“Trust remains a key issue in ESG communications, with a significant increase in community distrust in what organisations say about their ESG performance, and nearly two thirds thinking that greenwashing is a big problem in the UK,” said SEC boss Emma Kane in the report.
“ESG remains a useful term but ultimately it is undefined and will have differing meanings across asset classes, products, even businesses operating within the same industry and in particular across time horizons.”
- Rachel Richardson, Macfarlanes
The polling reflects a rising backlash to ESG, with CEOs across the world binning a term that was all the rage as recently as 2020.
Blackrock boss Larry Fink, who led the charge on ESG until last year, has now ditched it completely and said it had been “weaponised” by extreme political figures on the left and right.
Head of ESG at Macfarlanes Rachel Richardson, said: “ESG remains a useful term but ultimately it is undefined and will have differing meanings across asset classes, products, even businesses operating within the same industry and in particular across time horizons.”
But Jeremy Irving, partner at Browne Jacobson pointed out that “governments and regulators in the UK and elsewhere are increasingly focused on finding ways to give force to ESG” and clamp down on corporate greenwashing.
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Figures from the Investment Association last week showed that Investors had also bolted from responsible investment funds over the summer as the ESG frenzy that gripped the market ran out of steam.
Some £448m was pulled by retail investors from environment, social and governance (ESG) funds in August, the third consecutive month of outflows.
By City AM
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