Sangeet Anand | Is ESG a hoax?

Penn’s campus map epitomizes its robust culture of abbreviation. From DRL to KCECH to ARB, nearly nothing gets in the way of Quaker shorthanding. So, coming to Penn as a fervent environmentalist, it was only natural that I stumbled upon the term ESG within my first few weeks.

ESG, which stands for environmental, social, and governance criteria, is the large umbrella category that scientists, businesspeople, and politicians have come to use to highlight all things environmental. When I first heard this term in an environmental seminar in Houston Hall, I was enamored by it; there existed so many potential solutions for sustainable change encapsulated in this tiny three letter acronym. Under ESG, Penn was developing next-generation lithium ion batteries while simultaneously discussing the installment of global carbon taxes. ESG development and research seemed to be the panacea we have long searched for. 

However, my initial excitement was soon moderated by real world issues that are the main factors of the environmental crisis. Today, a mere 100 companies are responsible for 71% of global emissions, and while most have thriving ESG departments, these do little to cut back on the carbon footprint these large-scale corporations leave behind. In fact, many of these companies practice “greenwashing,” which is exactly what it sounds like: as companies begin to realize that corporate social responsibility in ESG increasingly draws the attention of consumers, some of them choose to exaggerate their green practices for the means of profit while not actually improving their practices. This presents an issue, however, if these reforms don't lead to any actual commitments that improve the environment. This leaves us with the ultimate question of if ESG initiatives are the answer to solving our environmental crisis.

With Penn being an institution at the center of economics, finance, and all things business, it holds a moral responsibility to instill values of social responsibility amongst its future leaders. Groups like Fossil Free Penn have been quick to highlight Penn’s continued investment in the fossil fuel industry, urging Penn to divest from these sources of climate disaster. Other organizations, such as the Student Sustainability Association at Penn  have organized campus wide events to foster better knowledge of sustainable practices in local communities. Recently, the Wharton School launched a pilot legal studies course in conjunction with the Business, Energy, Environment, and Sustainability concentration to educate students on the intersection of sustainability and business through a venture into the West Virginian wilderness.

Talk of ESG initiatives has certainly gotten the ball rolling on the larger conversation academic communities need to be having about business’s effect on the environment as a whole. As a Penn student, I am personally aware of how my actions can affect the environment every single day. I am faced with critical decisions at dining halls in choosing between disposable and reusable silverware and, in my dorm room, limiting the amount of waste I produce. But there is no doubt that there remains tremendous work to be done.

Today, there still exist many environmental disparities that Penn falls short in answering. With its campus in a diverse city such as Philadelphia, composed of individuals of all different socioeconomic backgrounds, Penn’s greater ESG work not only affects those who form Penn but also the community around it. In order to effect greater change, Penn must stand at the forefront of providing adequate resources to those who are unable to cope with the rampant effects of climate change and truly stand as a leader in enacting real environmental change.

As an institution, Penn can take action to avoid falling into the same greenwashing trap that many corporations do. For instance, Penn can set carbon reduction targets by pledging to hit carbon neutrality by a certain year. Additionally, Penn can rely on available ESG data from credible sources to enhance Philadelphian communities and its constituents through sustainable action. Most importantly, we must resist stretching the truth about eco-friendly initiatives we are making and instead start making viable efforts for the environment.

So, ask me again: do I think ESG is a hoax? Absolutely not! ESG has been the fundamental gateway to understanding core issues at the crux of environmental turmoil. But is there room for improvement? Most certainly! We, as global citizens, must take greater action to lead the way to a better planet.

SANGEET ANAND is a rising Wharton sophomore studying economics and concentrating in Business, Environment, Energy, and Sustainability from Potomac, MD. Her email address is sangeet@wharton.upenn.edu.