‘ESG Backlash Bingo’

5 min read
5 min read

Paul Schoff, partner and ESG Lead and Jeremy Cooper, strategic adviser, ESG at MinterEllison look at the global backlash against ESG, and diversity, equality and inclusion policies, and how Australian superannuation fund trustees should be viewing these developments.

What’s behind the current global backlash against ESG and what does it mean for Australian company directors in the first instance, and then for super funds investing in those companies? Do directors need to care about ESG anymore?

First, a bit of housekeeping. By ‘ESG’, we mean policies that take account of environmental, social and governance impacts, including diversity, equity, and inclusion (DEI) goals. Second, while the ESG backlash is happening primarily at a corporate level, it has implications for super funds that invest in those companies.


It’s hard to identify a singular objection underpinning the ESG backlash. Instead, we have discerned four main categories of objection. They run along a spectrum from the economic to the populist or cultural. You could even play ‘Backlash Bingo’ once you are able to identify the different rhetoric used to articulate each type of objection. Perhaps your favourite AI transformer could be pre-trained to help with this, but we digress. Back to the four categories.


First on the spectrum is a bundle of concerns – let’s call them cost and burden objections that are principally economic. These concerns coalesce around the idea that implementing ESG initiatives is just too costly and resource intensive. Mandatory climate reporters, for example, point to the Explanatory Memorandum for the legislation passed last August. It included an estimate that the average incremental cost of reporting each year for the next 10 years was $1m to $1.3m. As well as cost and burden, words you will hear in this context include: ‘expensive’; ‘inefficient’; ‘uncompetitive’.


The next group of objections echo Milton Friedman’s view that the primary responsibility of a company is to maximise shareholder value. Contemporary adherents to this view believe that ESG initiatives conflict with this goal, but their concerns are nonetheless ideological. You will hear words like ‘shareholder return’, ‘stick to knitting’, ‘distraction’, and ‘misalignment’ from this quarter.


Those in our third category contend more simply that any additional environmental or social regulatory burden is unjustifiable per se. This veers even more to the ideological, perhaps leaning to libertarian. ‘Box ticking’, ‘unnecessary government intervention’ and ‘green tape/red tape’ are the kinds of words you hear. Through this lens, something like mandatory climate-related financial reporting is just green tape to be ‘slashed’ or a ‘shackle’ to be thrown off.


Lastly, there is the purely populist or cultural aspect to the ESG backlash. This stems from a range of factors: marginalisation of blue-collar workers and resulting income inequality, economic frustration, and a general resistance to change. Populism often seeks an ‘other’ to rally against, and ESG initiatives seem to have become that target because they can be identified as ‘woke’ or things peddled by ‘elites’. In this narrative, elites are to blame for the complainants’ marginalisation. Objectors here, particularly in the US, are prone to using expressions like: ‘lunatic left’, ‘woke capitalism’ and so on.


While the backlash is certainly ‘real’ and purposeful in human or political terms, the physical and social sciences still point the other way. Has climate risk and opportunity gone away because a new administration in the United States has said it has? No. Company directors do still need to care about climate risk and opportunity as do super funds. Global greenhouse gas emissions are still heating up the planet. Well-directed companies that want to be sustainable in that world still need to grapple with the risks and opportunities that arise, whatever happens in the White House. Super funds will want to ensure that they are investing in companies that are on the right side of those risks and opportunities.


So where does this leave company directors? We think they can distil the answer into three essential lessons.


First, they must be satisfied that their chosen course of action is in the best interests of the company and gather evidence to support that view. If the evidence doesn’t support the strategy, they must recalibrate!
Second, they should engage with the relevant stakeholders on ESG issues. Open and transparent communication with stakeholders is vital. This includes investors, but also employees, customers, local communities, and regulators.


Third, they need to stay informed and adaptive. The ESG landscape constantly evolves. Directors should watch stakeholder expectations, regulatory trends, and best practices. The obligation of care and diligence is not passive. It requires an understanding of the subject matter and an active application of their independent judgment. Are the company’s approaches to social and environmental issues fit for purpose and do they reflect emerging risk areas? They absolutely shouldn’t just aim for compliance.


Qantas Chair, John Mullen, recently noted the winding back of some ESG initiatives but expressed the view that mainstream DEI and ESG initiatives have largely been shown to improve performance and add value to corporations. This was his advice to company directors about what to do in the wake of the ESG backlash:


“Don’t be radically woke but don’t be radically anti-woke either. Just do what you think is right and stick to it.


And always, as a director, be prepared to make a decision that differs from your personal conviction if it is the best thing for the company.”


Super funds should be watching closely how their portfolio companies approach ESG issues in this ‘backlash era’. With their elevated stewardship function and the longer time-horizons involved, super funds should be on the lookout for signs of boards ‘flip-flopping’ on their approach to ESG.

Picture of By Paul Schoff, partner and ESG Lead and Jeremy Cooper, strategic adviser, ESG, MinterEllison, Sydney

By Paul Schoff, partner and ESG Lead and Jeremy Cooper, strategic adviser, ESG, MinterEllison, Sydney

More Reading

Q&A with IFM Investors’ David Whiteley
In-Depth In-Depth

Q&A with IFM Investors’ David Whiteley

Super system can turbocharge productivity on road to net zero
In-Depth In-Depth

Super system can turbocharge productivity on road to net zero

Understanding the Division 296 super tax
In-Depth In-Depth

Understanding the Division 296 super tax

Derek Thompson

Via live link

Best Selling Author, Podcast Host of 'Plain English'

Sessions

Keynote 8 – Navigating the energy transition: opportunities, investor strategies and policy needs

Few speakers can match Derek Thompson‘s ability to synthesize mega-trends in society, labor, economics, technology, and politics. Put another way: Derek trawls the data sets and does the forecasting and deep reporting necessary to help us better understand how we live, how we vote, how we spend, and how we work.

In his paradigm-shifting #1 New York Times bestseller, Abundance (co-written with Ezra Klein), this award-winning journalist reveals how our policies and culture have pushed us into a world of scarcity (not enough housing, workers, or progress)—and offers a radical new path towards a world where housing is affordable, energy is plentiful, and innovation flourishes across industries.

He shares a compelling vision of a future where we have more than enough for everybody, and a practical, actionable roadmap for how to get there. It starts with taking more risks, building more expansively, and recognizing that we all have the power to create a world of abundance. “Everything’s utopian until it’s reality,” he says.

Carmen Beverley-Smith

Executive Director - Superannuation, Life & Private Health Insurance, APRA

Sessions

Keynote 8 – Navigating the energy transition: opportunities, investor strategies and policy needs

Carmen joined APRA in March 2023 and holds the role of Executive Director, Life and Private Health Insurance and Superannuation.  

She has had an esteemed career in financial services, spanning over 25 years. She has held diverse leadership roles at Westpac and Commonwealth Bank of Australia, including across risk, transformation and change, product and portfolio development, and sales and service. 

Prior to joining APRA, she held the role of General Manager, Risk Transformation Delivery Integration at Westpac. This involved leading the group-wide implementation of a suite of solutions to uplift risk management capability and develop data, analytics and reporting. 

Carmen leads with a values-driven approach and a particular interest in developing and mentoring talent. 

She holds a Bachelor of Commerce and Accounting, is a certified Chartered Accountant and a Graduate of the Australian Institute of Company Directors. 

Amy C. Edmondson

Novartis Professor of Leadership and Management, Harvard Business School

Sessions

Keynote 8 – Navigating the energy transition: opportunities, investor strategies and policy needs

Amy C. Edmondson is the Novartis Professor of Leadership and Management at the Harvard Business School, a chair established to support the study of human interactions that lead to the creation of successful enterprises that contribute to the betterment of society.

Edmondson has been recognized by the biannual Thinkers50 global ranking of management thinkers since 2011, and most recently was ranked #1 in 2021 and 2023; she also received that organization’s Breakthrough Idea Award in 2019, and Talent Award in 2017.  She studies teaming, psychological safety, and organisational learning, and her articles have been published in numerous academic and management outlets, including Administrative Science Quarterly, Academy of Management Journal, Harvard Business Review and California Management Review. Her 2019 book, The Fearless Organization: Creating Psychological Safety in the Workplace for Learning, Innovation and Growth (Wiley), has been translated into 15 languages. Her prior books – Teaming: How organizations learn, innovate and compete in the knowledge economy (Jossey-Bass, 2012), Teaming to Innovate (Jossey-Bass, 2013) and Extreme Teaming (Emerald, 2017) – explore teamwork in dynamic organisational environments. In Building the future: Big teaming for audacious innovation (Berrett-Koehler, 2016), she examines the challenges and opportunities of teaming across industries to build smart cities. 

Edmondson’s latest book, Right Kind of Wrong (Atria), builds on her prior work on psychological safety and teaming to provide a framework for thinking about, discussing, and practicing the science of failing well. First published in the US and the UK in September, 2023, the book is due to be translated into 24 additional languages, and was selected for the Financial Times and Schroders Best Business Book of the Year award.

Before her academic career, she was Director of Research at Pecos River Learning Centers, where she worked on transformational change in large companies. In the early 1980s, she worked as Chief Engineer for architect/inventor Buckminster Fuller, and her book A Fuller Explanation: The Synergetic Geometry of R. Buckminster Fuller (Birkauser Boston, 1987) clarifies Fuller’s mathematical contributions for a non-technical audience. Edmondson received her PhD in organisational behavior, AM in psychology, and AB in engineering and design from Harvard University.

 

Daniel Mulino MP

Assistant Treasurer and Minister for Financial Services

Sessions

Keynote 8 – Navigating the energy transition: opportunities, investor strategies and policy needs

Born in Brindisi, Italy, Daniel was a young child when he moved with his family to Australia. He grew up in Canberra and completed his first degrees – arts and law – at the ANU. He then completed a Master of Economics (University of Sydney) and a PhD in economics from Yale.

He lectured at Monash University, was an economic adviser in the Gillard government and was a Victorian MP from 2014 to 2018. As Parliamentary Secretary to the Treasurer of Victoria, Daniel helped deliver major infrastructure projects and developed innovative financing structures for community projects.

In 2018 he was preselected for the new federal seat of Fraser and became its first MP at the 2019 election, re-elected in 2022 and 2025. From 2022 to 2025, Daniel was chair of the House of Representatives’ Standing Economics Committee in which he chaired inquiries; economic dynamism, competition and business formation and insurers’ responses to 2022 major floods claims.

In 2025, he became the Assistant Treasurer and Minister for Financial Services.

In August 2022, Daniel published ‘Safety Net: The Future of Welfare in Australia’, which aims to explore the ways in which an insurance approach can improve the effectiveness of government service delivery.