YD's Diary #3 in HY-MBA, Reflections on the Criticism of ESG Management

Reflections on the Criticism of ESG Management 
(Subtitle: A Tribute to Larry Fink)

As I study the world of ESG management, I frequently encounter negative news and opinions about ESG. The topics of environment, society, and governance encompass social, political issues, and traditional confrontational structures, which humanity is still struggling to find solutions for. This complexity often leads to harsh criticism or even outright rejection when a minor flaw is found, especially in the face of misguided political beliefs or the recent trend of political correctness in the United States.

The term ESG first appeared in the UN in the early 2000s, but it was first introduced to my life when Larry Fink’s letter made the news. At that time, I too casually dismissed it, thinking it was a bit premature. However, as the terms related to ESG began to appear in society and the meaning was sought, it seems that various places are having a debate.

Returning to the title, the reason why ESG management is criticized may be because the large chunk of ESG debate is introduced to the company without a precise definition. The purpose of a company is to pursue profits, and while seeking sustainable management for this, it suddenly demands sustainable methods for the earth (environment) and society, and when people see successful cases like Patagonia or MS, they will start to criticize thinking they are different from them. Perhaps, they maybe think, “So, should we reduce profits even if there are no benefits? How far exactly are we supposed to help sociaty?” It seems like the pain comes from the process of finding answers to these questions.

Larry Fink, too, must have been torn apart like crazy and disgusted by the good prey in the American society in this situation, where politics and correctness and such debates are caught. So, he must have said that he doesn’t want to use the term ESG in the future. I think Larry Fink’s intention was for companies to pursue sustainable management for survival and profit, and as the development of humanity progresses, as a company on earth, a company in society, a company in a country, the appearance that the times want is to find a direction that helps the environment and society related to their business and strive for it.

Looking at the fact that I am currently studying ESG, I think at least Larry Fink’s letter was not in vain.

From what I’ve thought about while taking classes, when a company introduces ESG, depending on whether the company’s business characteristics directly affect the environment or indirectly affect it, the method should be different, and to contribute more to the society they belong to, for example, help the weak, create a corporate environment that increases the birth rate, or make individuals live a happy life, I think they should introduce ESG management through these considerations.

YD's Diary #3 in HY-MBA

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