From ESG to OMG
Why the name matters less than the mindset
The language of business is changing. ESG has captured this change well, but its future is uncertain. Yet, the need for companies to build resilience in an unpredictable world has never been greater.
As we approach the first anniversary of ESG Mindset at the end of April, I’m reflecting on the term. The book has done reasonably well—so much so that the publisher asked me for a follow-up.
And I’ve been thinking about a second book, but as ‘ESG’ has fallen out of favor, new terminology has cropped up. This led me to wonder how I could adapt the theories behind ESG for the title of my Empire Strikes Back.
I still advocate for ESG as a simple way to remember that interconnected non-financial issues affect the company, but I get it. No one wants to be challenged just for sticking to their nomenclature.
Still, if we were to replace it with a new term, what would it be?
Resilience
I like the word resilience because part of ESG focuses on the company’s long-term stability. Resilience locks the meaning towards a key benefit of an ESG mindset: riding out a storm and recovering quickly.
Still, there is a chance that resilience is just a term for this unique moment of political upheaval and a response to another term: uncertainty.
Uncertainty is currently the only certainty out there. It is popping up in business journals and on the lips of world leaders. Companies navigating this landscape need more than short-term tactics; they need strategies that build resilience.
Will resilience endure when the world stabilizes, or is it just meeting the moment?
Future-Proof
This captures long-term stability well, but maybe a little too well. Nothing is future-proof. It is similar to the false win-win narrative of doing well by doing good. While tempting to use, it is best to avoid.
Sustainability
Some are shifting to ‘sustainability,’ but honestly that’s how we got into the confused mess in the first place. In 2004’s early ESG mention, the prescient UN’s Global Compact stated:
Throughout this report we have refrained from using terms such as sustainability, corporate citizenship, etc., in order to avoid misunderstandings…
If only financial leaders had read that whitepaper. Spoiler alert: they didn’t.
Sustainability is precisely what the anti-ESG campaign opposes, making it an easy target. It is closer to the energy transition, potential immaterial issues, and boycotts than ESG gets. Out of all the options, this is the weakest but most favored option.
Special #SorryNotSorry to the CFA Institute, who are renaming their ESG Investing Certificate to Sustainable Investing.
Sustainable growth might be what businesses are after, but not ‘sustainability.’
Transition and Refounding
Larry Fink famously dropped ESG for the energy pragmatism in his last annual CEO letter. This combines the opportunities of the transition and energy security.
Transition is needed, but the word has a problem. It can align too closely with future-looking statements. It assumes the company is always in transition into some nebulous future state. A similar term might be ‘refounding,’ but I think that helps a company transition to a new operating state at a point in time, not necessarily prepare them for ongoing changes.
A transition or refounding might be needed before 2030 to shift business operations, but we need something more continual.
Integrated Strategy and Risk (ISR)
Yes, another acronym (OMG!). I came up with this one after thinking about another catch-all acronym. Rather than focus on the pillars of ESG, it focuses on the risks and opportunities. This is based on integrated ESG and financial reporting, which makes it well suited for business and the bottom line.
It’s similar to another acronym, CSR (Corporate Social Responsibility), but it better reflects the integration of these considerations.
This might not be such a bad idea; however, we might need some ‘capabilities’ to support it. Capabilities might focus on environmental priorities, social impact and stakeholders, governance, and technological risks.
Each topic the company chose would align with what is most material to the business and its stakeholders. In other words, actual ESG could be found under the covers.
What a novel idea!
ESG and adaptability
In certain circles, ESG isn’t going away quite yet. If you check Google Trends Worldwide, ESG isn’t losing interest.
However, ESG’s interest in the US has waned and leveled off.
Ultimately, the terminology shift reflects something more profound. Businesses are grappling with articulating their efforts to manage non-financial risks, seize new opportunities, and build resilience in an increasingly complex world.
Resilience alone isn’t enough. Companies that embed resilience, embrace change, and align strategy with evolving risks won’t just survive, they’ll shape the future.
But maybe I’ve uncovered something every business and ESG professional needs: adaptability. Adaptability is about managing the business in a world of constant and fast-paced change.
And this idea couldn’t come at a more critical time because we are no longer at another expression: ‘business as usual.’
The name matters less than the mindset as the path to lasting value isn’t found in a single term. Companies that adapt by embedding resilience, embracing change, and aligning strategy with evolving risks will lead the way.
Adaptability isn't just an advantage in a world that won’t stop changing. It is the new survival of the fittest: boardroom edition.