It might be tempting for purpose-driven companies to think of the “woke
capitalism”
smear
as just a warmed-over meme — a bit of foam-flecked trolling sure to dissipate as
soon as the cloud of performative outrage clears.

But that’s a dangerous dismissal. Right-wing
agitation
against corporate commitments to improve environmental, social and governance
performance already has had a negative effect. The SEC’s long-anticipated
rule
on disclosing greenhouse gas emissions may be watered
down
following Republican complaints about “woke capitalism.” And it’s not just
bureaucrats who are backing away: BlackRock CEO Larry Fink, not long ago
a vocal proponent of stakeholder
capitalism,
is in full-fledged
retreat.

Many corporations seem inclined to follow Fink’s “Don’t say ESG” strategy.
Fortune
reported
that at a recent gathering of 40 ESG executives, most said they are abandoning
the term but “doubling down” on ESG-related initiatives. But it’s hard to see
how this can work. Anti-ESGers are not just coming for the words; they’re
coming for the
substance.
And that’s a brand threat companies can’t just wait out.

The anti-woke crowd is advocating ‘backward capitalism’

The impulse to duck and cover is understandable — no one wants to present
themselves for a pitchforking. But agitators are telling a story that’s both
inaccurate and bad for business; and it’s time to talk about the dark,
retrograde vision implicit in their critique.

Take the anti-woke crusaders’ rhetoric and proscriptions to their logical
conclusion and you get a business and finance world clinging to the past,
sleeping through the present, and insensible to the future. Call it “backward
capitalism.” This is an economy in which fossil fuels rule (Backward capitalists
are keen to shore up investment in oil, gas and firearms with anti-ESG state
laws
— even if they cost taxpayers and retirees hundreds of millions of dollars) —
with polices that accelerate climate disaster, poison the air and water, and
destroy vital ecosystems; where workers are poorly paid and unprotected (child
labor
already is making a comeback), and crony-ridden governance structures enable and
obscure it all.

The anti-woke contingent isn’t just targeting what they perceive to be a few
excesses. They dismiss the mainstream view of ESG assessment as a smart
risk-mitigation strategy and flat-out reject the idea that businesses should
consider anything but short-term profit. They claim that “woke” corporations are
imposing
environmental and social initiatives on a society that doesn’t want them. But
this is the opposite of the
truth:
“People say business should do more, not less, to address issues like climate
change, economic inequality and workforce reskilling,” the 2023 Edelman Trust
Barometer
found
— echoing years of similar results. Shareholders have driven adoption of ESG
reporting, more intentional investments and governance improvements; while
employees
and customers have spurred action on social and environmental issues.

Stand up for ESG, corporate responsibility and stakeholder capitalism

Ignoring sound business strategy and clear, consistent demands from core
stakeholders isn’t typically a pathway to long-term success. And silence won’t
deter further attacks — though it certainly could compromise long-term brand
value. The rising ranks of workers, entrepreneurs and investors are not going to
follow the backward capitalists into the 19th century; they’ll reward brands
that can credibly point to a promising future. The best strategy in this
contentious moment is not to hide ESG commitments, or even to defend them — but
to actively make a positive case for them.

Corporations whose ESG assessments serve primarily to reveal risks and identify
potential mitigations should say so, in every context where they mention ESG
actions. Those that have made positive social and environmental performance a
core aspect of their
brand
should promote the measurable impact of significant initiatives and make public
commitments to continuous improvement. And the activist businesses that have led
the B Corp
movement
and other efforts to use business a force for good should make an affirmative
case for fully embracing stakeholder
capitalism.

Broadly implemented, a stakeholder approach can produce declining environmental
impacts; activate efforts to mitigate climate change and regenerate ecosystems;
solidify living
wages
and hiring practices that draw from and support the whole talent
pool;
and foster governance that prioritizes transparency, accountability and
net-positive impact. That’s a vision for a world most of us want to live in —
so, we must stand up for it.