Hot Nerd Summer: ESG Comes to Washington

The hot topic for policy nerds in Washington these days is “ESG,”  which refers to environmental, social, and governance standards for corporations. Like I said, nerds.

Progressive nerds in D.C. are excited about the possibility that scores for companies on policies related to climate change and social justice particularly will provide a new tool to push companies leftward. Conservative nerds are afraid of exactly that, while nationalist nerds are looking for ways to replicate the technique for themselves. 

Like most hot topics, ESG didn’t start in Washington but is being embraced here as part of its endless, yet always failed bid for currency and relevance. John F. Kennedy is still right: a city of Northern charm and Southern efficiency. Washington now has world-class restaurants and its beauty only grows, and I have grown very partial to the funky, friendly rhythm of life here. But this is still a place where things end up, not where they get started. 

The idea of ESG scores is a California-via-Wall Street concept born in the 1990s out of the conscience pangs of progressive investors, including some very big fish in the tech and hedge fund worlds. If ratings firms could evaluate companies for profit potential, how about do-goodery? The reasoning then followed that since high standards on carbon emissions, diversity and inclusivity, and executive pay (the “G” for governance) would produce strong companies of great longevity, that these were actually good for the bottom line, too. Or that was the idea.

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