Tisha’s Insights

Navigating the Anti-ESG Minefield

October 12, 2022 Tisha Schuller & Kelsey Grant
adamantine image

Just when company leaders have started full-scale implementation of their substantive ESG plans, the anti-ESG movement is getting some traction. What should you do when you get so many contradictory messages on ESG from important corners, including state governments? Although the critiques of ESG vary widely, and skepticism about ESG — not to mention outright opposition to it — isn’t new, these latest high-profile attacks are creating new minefields for oil and gas executives.

The most full-throated and compelling attack on ESG comes from critics who see it as a distraction from companies’ core business and financial duties. Other critics have politicized the debate — as did former Vice President Mike Pence, who described ESG as the creeping encroachment of “woke” political and social ideology across corporate America. Elon Musk also parachutes regularly into this politicized terrain. He famously said: “E.S.G. is a scam. It has been weaponized by phony social justice warriors.”

The anti-ESG momentum has placed many investors and corporate leaders in a bind — but this latest headlock is nothing new. Leadership in the midst of disruption always has to address the conflicting desires of investors, stakeholders, communities, employees, and regulators. To navigate these conflicts, oil and gas leaders must return to their culture, values, and strategies. They should articulate strong priorities and plans that are good for both the businesses they run today and the successful businesses they expect to run in a future that looks radically different.

Both of these things are true:

  • Anti-ESG sentiments have gained traction among some public figures, elected officials, and shareholders — largely along partisan and ideological lines.
  • The predominant drivers of the sector’s ESG strategies haven’t gone anywhere, and oil and gas companies are still under immense pressure to devise and implement those strategies.

The situation

At Adamantine, we are keeping our eye on the following anti-ESG developments.

States purging ESG. Over the last year, several states have launched campaigns to protest or curtail ESG practices of financial institutions:

  • Most notable is West Virginia, which, in January, formally barred several financial institutions — including BlackRock, JPMorgan, Goldman Sachs, Morgan Stanley, and Wells Fargo — from ineligible for state banking contracts because they were deemed to be “boycotting” fossil fuel companies.
  • Texas blacklisted 10 financial firms, including BlackRock, for the same reason. Texas Comptroller Glenn Hegar said ESG “has produced an opaque and perverse system in which some financial companies no longer make decisions in the best interest of their shareholders or their clients.” Several other states, such as Florida and Idaho, have followed suit with actions of their own.
  • Finally, 19 attorneys general — primarily from Republican-led states — issued a letter to BlackRock inquiring into the asset manager’s ESG investment practices. They questioned BlackRock’s motives and accused the firm of focusing on a “climate agenda,” as opposed to being an effective financial steward.

Tightrope walk. In response to the letter by states’ attorneys general noted above, BlackRock continued its tightrope walk over the chasm between conflicting stakeholder priorities and issued a response, reaffirming its commitment to proactive ESG leadership: “We believe investors and companies that take a forward-looking position with respect to climate risk and its implications for the energy transition will generate better long-term financial outcomes.”

Anti-ESG activist investors. We have become familiar with investors and shareholders pushing companies to integrate ESG across their business. Making an entrance now are anti-ESG activist investors. For example, Strive Asset Management recently submitted a letter to Chevron, of which it is a small shareholder, demanding that the company broadly abandon its ESG efforts, from its emission reduction commitments to producing ESG reports to evaluating projects with “social, political, cultural, or environmental goals” in mind.

Anti-anti-ESG. Proponents of ESG are firing back. Thirteen state treasurers and the New York City comptroller also responded to efforts by state officials to curtail ESG activities, accusing “blacklisting states” of being shortsighted and discounting the materiality of ESG factors to businesses. One week after this, New York City Comptroller Brad Lander took matters one step further by individually writing a letter to BlackRock saying that it wasn’t doing enough to achieve its climate commitments and requested that the asset manager publish an implementation plan outlining how it will reach its emission goals.

Seize the day

Admittedly, the ESG virtue-signaling landscape has gotten more complex, and companies no longer get either a gold star or even a hall pass for superficial commitments to ESG. Yet the fundamental, directional pressures on ESG have not changed: Major financial institutions and investors, the millennial-dominated public, and much of our workforce still expect your company to have an implementable, robust ESG strategy. Companies should take these steps to navigate the competing pressures:

  • Know your ESG strategy’s drivers. The best way to communicate clearly about the purpose and longevity of your ESG strategy is to know the strategy’s drivers, opportunities, and risks. All of the ESG strategy analyses we have done for our clients have produced compelling rationales for their strategies — rationales that include building community support, attracting and retaining talent, and taking advantage of emerging business opportunities.
  • Ensure your ESG strategy is authentic and compelling. Company leaders will continue to face reasonable questions both internally and externally about the rationales behind their ESG efforts. We’ve found these conversations become easy to navigate when your strategy has a strong rationale tied to your company’s culture and strategic priorities.
  • Continue to gather input. In an arena that will continue to evolve, it is always worthwhile to talk to your investors and key stakeholders about their evolving interests and priorities.
  • Stay above the political fray. We expect ESG to stay politicized, but that doesn’t mean that you have to be. Anti-ESG has become a political and cultural lightning rod, at not only the state level but also the federal. As with other hot-button issues we’ve discussed previously, we recommend that you avoid reactive, partisan political engagement and rhetoric.
  • Acknowledge the controversy. Employees across your business are hearing this anti-ESG sentiment, too. We recommend that you acknowledge the conflict as well as the many reasonable concerns it represents. Ultimately, effective implementation of your ESG strategy across your business requires your employees’ support and buy-in. Consistently communicate the value proposition that your ESG strategy brings to your company, why certain factors are material to your business, and how your ESG efforts support your long-term sustainability.

Two resources for you:

  • If you are new to ESG, check out the first segment in Anne (Carto) Kurtis’s two-part series on developing your company’s approach to ESG.
  • At Adamantine, we work with our client partners to develop, articulate, and execute enduring ESG strategies. Reach out if you’d like to work with us — we are now committing clients for January 2023

Thank you to Kelsey Grant for her work on this edition of Both True.

To your fleet feet,



Have Tisha’s insights delivered right to your inbox

tisha schuller
logo white

Both of These Things Are True

By Tisha Schuller