IT MAY NOT seem unusual that a corporate CEO would want to focus on increasing shareholder value, but in October this was treated as big news. A Financial Times headline announced that “Unilever’s new chief says corporate purpose can be ‘unwelcome distraction.’” That new CEO, Hein Schumacher, went on to explain that he rejected the idea that “every brand should have a social or environmental purpose.” He intended, he said, to build a “performance culture” instead.
Why would it be newsworthy for a CEO to be focused on corporate performance? Not long ago, that was simply assumed. What changed?
The change is summed up by three letters of corporate jargon: ESG. The initials stand for environmental, social, and governance factors, and the term dates back two decades. Early ESG documents—such as the 2004 report “Who Cares Wins,” produced under the auspices of the United Nations (U.N.)—suggest an effort to globally coordinate private and public sector activity toward a shared set of social objectives. This was a departure from previous efforts at injecting political and moral values into business (such as corporate social responsibility, socially responsible investing, impact investing, and so on) in that it pointed to a future of uniform ESG standards, enforced
